Wage Subsidy Scheme Issues

hmmm

Your business can be down 25%, and still be solvent, and still qualify for this. There's quite a few businesses who will get through this although less revenue is coming in, if they can get a dig-out from the government.

There's lots of companies applying for this where everyone is still working. I think a lot of companies will find something for their employees to do during this time (unless your e.g. a waiter, or working in a hotel).

Dav010

Dav010 wrote: »

I can’t think of a business that would not be down.

Even large food/grocery retailers are down as it's lots of the low or negative margin items that are being sold.

CiarraiAbu2

settopbox wrote: »

My employer has brought me into work as normal, but it now only paying me the 350 euro.
I see it as him being essentially getting a subsidy from the govt for my wages, its costing him nothing to employ me.

Is this right ?

he is saying that he doesnt have the means to pay me ..

You would get the same for sitting at home, sound like he taking advantage, this is a subsidy, you are still meant to get the same nett wage each week.

Dav010

CiarraiAbu2 wrote: »

You would get the same for sitting at home, sound like he taking advantage, this is a subsidy, you are still meant to get the same nett wage each week.

Dear God. If that is the case, unemployment payment is better suited to you than wage subsidy. The subsidy scheme you are still employed, so if the work is necessary, you do your job. While some might be afraid to leave home, the “why bother” attitude, or suspicion that the employer is in some way taking advantage of an employee is appalling. I wonder is this just an Irish thing?

Mobile mad

Dav010 wrote: »

You are missing the point. If your business is down by 25%, you can apply for wage subsidy to pay your staff. The client might pay for this job, but business is likely to be down considerably.

I think that if you are not happy about staying on the books, I’m sure your employer would understand if you ask to be made unemployed.

But isnt there a partial payment my company that they can apply for like the 3 days I'm off get 3/5 of the covid payment and then my 2 days pay I dont know maybe I'm the one being unreasonable

gb19815

Mobile mad wrote: »

But isnt there a partial payment my company that they can apply for like the 3 days I'm off get 3/5 of the covid payment and then my 2 days pay I dont know maybe I'm the one being unreasonable

Ask them questions to your employer

Mobile mad

gb19815 wrote: »

Ask them questions to your employer

Easy tiger

gb19815

Has anyone been paid through this service ? Had any tax been re issued ?

Dav010

Mobile mad wrote: »

But isnt there a partial payment my company that they can apply for like the 3 days I'm off get 3/5 of the covid payment and then my 2 days pay I dont know maybe I'm the one being unreasonable

Technically, you are still working. They do not have to top up at all, it is voluntary. If you were still at work 5 days per week and the company was 25% down on business, they would not have to pay you a top up.

You are being unreasonable. The wage subsidy is there to help your company survive, and help you keep your job.

Stratvs

gb19815 wrote: »

Has anyone been paid through this service ? Had any tax been re issued ?

I've done payroll for an employer who is closed where they are paying the employee their normal net. ie they have topped up the 70% subsidy to 100% normal net. Lets say it was €550 net. The employer gets €385 back from Revenue. So it costs the employer €165 net. The €165 net grosses up to say €200. The €200 is taxable but the €385 is not. So the person's tax credits more than cover the €200. That is resulting in a tax/usc refund to the employee of around €30. So the employee gets €550+€30=€580.

The €30 tax/usc refund is a problem as ultimately the €385 subsidy is taxable but can't be taxed in payroll under the scheme. So at the year end Revenue will be looking for that back by adjusting credits going forward. I'd have thought putting employees on W1/M1 basis would stop that happening and still leave employee with normal pay.

Heres Johnny

Dav010 wrote: »

Dear God. If that is the case, unemployment payment is better suited to you than wage subsidy. The subsidy scheme you are still employed, so if the work is necessary, you do your job. While some might be afraid to leave home, the “why bother” attitude, or suspicion that the employer is in some way taking advantage of an employee is appalling. I wonder is this just an Irish thing?

I thought that was a good post until you brought up the "just an Irish thing".
Of course it isn't

gb19815

Stratvs wrote: »

I've done payroll for an employer who is closed where they are paying the employee their normal net. ie they have topped up the 70% subsidy to 100% normal net. Lets say it was €550 net. The employer gets €385 back from Revenue. So it costs the employer €165 net. The €165 net grosses up to say €200. The €200 is taxable but the €385 is not. So the person's tax credits more than cover the €200. That is resulting in a tax/usc refund to the employee of around €30. So the employee gets €550+€30=€580.

The €30 tax/usc refund is a problem as ultimately the €385 subsidy is taxable but can't be taxed in payroll under the scheme. So at the year end Revenue will be looking for that back by adjusting credits going forward. I'd have thought putting employees on W1/M1 basis would stop that happening and still leave employee with normal pay.

Thanks for that

maestroamado

Sono Topolino wrote: »

If his turnover has fallen 25% and he is self-declaring that he doesn't have the means to pay you, then I wonder how you are adding value? He probably should let you go home.

I found your initial post interesting and curious as to whether your legal advise was correct.

I just be interested as it raised an interesting question...

CiarraiAbu2

Dav010 wrote: »

Dear God. If that is the case, unemployment payment is better suited to you than wage subsidy. The subsidy scheme you are still employed, so if the work is necessary, you do your job. While some might be afraid to leave home, the “why bother” attitude, or suspicion that the employer is in some way taking advantage of an employee is appalling. I wonder is this just an Irish thing?

I'm self employed, but that's not the point, it's a subsidy scheme, the employee is meant to get the same nett payment.
Are you trying to say that it's ok for an employer to pay just the 350 and receive it back from the government?
What happens when it becomes a 70% refund, will be ok to pay them 70% of 350.
Why should an employee work for 350 when he spend time at home safely with his family for the same amount.
And as for it been an Irish thing, well that says more about you than anything else.

Dav010

CiarraiAbu2 wrote: »

I'm self employed, but that's not the point, it's a subsidy scheme, the employee is meant to get the same nett payment.
Are you trying to say that it's ok for an employer to pay just the 350 and receive it back from the government?
What happens when it becomes a 70% refund, will be ok to pay them 70% of 350.
Why should an employee work for 350 when he spend time at home safely with his family for the same amount.
And as for it been an Irish thing, well that says more about you than anything else.

What?

It’s 70% of your net wage payment up to a max of €410, not 70% of the €350 the Government pays.

Why should an employee work? To help keep their employer open and safeguard their job. It is actually easier for an employer to lay the employee off and tell them apply for unemployment payment.


https://www.revenue.ie/en/employing-people/documents/pmod-topics/guidance-on-operation-of-temporary-covid-wage-subsidy-scheme.pdf

CiarraiAbu2

Dav010 wrote: »

What?

It’s 70% of your net wage payment up to a max of €410, not 70% of the €350 the Government pays.

Why should an employee work? To help keep their employer open and safeguard their job. It is actually easier for an employer to lay the employee off and tell them apply for unemployment payment.


https://www.revenue.ie/en/employing-people/documents/pmod-topics/guidance-on-operation-of-temporary-covid-wage-subsidy-scheme.pdf

I'm well aware of how it works, however the employer is meant to pay as close as he can to the nett pay. Anyway I can't really argue with you as we have no idea of the business or it's financial position.

Dav010

CiarraiAbu2 wrote: »

I'm well aware of how it works, however the employer is meant to pay as close as he can to the nett pay. Anyway I can't really argue with you as we have no idea of the business or it's financial position.

No they aren’t.

Revenue calculate the subsidy payment based on 70% of net wage up to a max subsidy of €410, the employer is not “meant” to top up, it is completely optional.

CiarraiAbu2

Dav010 wrote: »

No they aren’t.

Revenue calculate the subsidy payment based on 70% of net wage up to a max subsidy of €410, the employer is not “meant” to top up, it is completely optional.

The employer is expected to make best efforts to maintain the employee net income as close as possible to normal net income for the duration of the subsidy scheme.

ZeroThreat

CiarraiAbu2 wrote: »

The employer is expected to make best efforts to maintain the employee net income as close as possible to normal net income for the duration of the subsidy scheme.

Well, I'd guess that the total wage bill as a % of an organisations weekly/monthly outgoings will vary widely depending on the industry or sector it operates in. But if a company needs zero wage cost to itself in order to continue operations it's already pretty far up $*%t creek (which I'd imagine that many already are) and won't be staying open for much longer in any case.

Anyway all that matters at the end of the day is the letter of the law, stuff like 'expected to make best efforts....' is meaningless from any legal standpoint.

And bear in mind that for the foreseeable future, it's going to be an employer's market.

Dav010

CiarraiAbu2 wrote: »

The employer is expected to make best efforts to maintain the employee net income as close as possible to normal net income for the duration of the subsidy scheme.

It is optional, if the employee is off, as most are at the moment, and employers were meant/expected to top up to usual net wage under the subsidy scheme, would it not make more sense to lay the employee off? Think about it, then you will understand why it is optional.

CiarraiAbu2

Dav010 wrote: »

It is optional, if the employee is off, as most are at the moment, and employers were meant/expected to top up to usual net wage, would it not make more sense to lay the employee off? Think about it, then you will understand why it is optional.

If the employee wasn't working then the employer would not be receiving the subsidy. In good faith they should be attempting to pay the difference, if they need to trade without a wage cost the are fecked anyway. In a couple of weeks time they are going to have to pay 30% anyway.

Dav010

CiarraiAbu2 wrote: »

If the employee wasn't working then the employer would not be receiving the subsidy. In good faith they should be attempting to pay the difference, if they need to trade without a wage cost the are fecked anyway. In a couple of weeks time they are going to have to pay 30% anyway.

Please stop. The Government encouraged business owners to apply for the subsidy even if the employee can’t work. It it to preserve the connection between the employee/employer so that jobs are preserved, they can get back to work quickly and save people from going into the unemployment register.

Most companies are now in “hibernation”, reducing outflow, saving cash reserves so that they can trade again. In a couple of weeks time, hopefully there will be income coming into businesses so they can pay staff full wage, if the company has to cease trading because they could not safeguard cash reserves due to paying staff while there is no income coming in, well that’s the worst end result.

CiarraiAbu2

Dav010 wrote: »

Please stop. The Government encouraged business owners to apply for the subsidy even if the employee can’t work. It it to preserve the connection between the employee/employer so that jobs are preserved, they can get back to work quickly and save people from going into the unemployment register.

Most companies are now in “hibernation”, reducing outflow, saving cash reserves so that they can trade again. In a couple of weeks time, hopefully there will be income coming into businesses so they can pay staff full wage, if the company has to cease trading because they could not safeguard cash reserves due to paying staff while there is no income coming in, well that’s the worst end result.

What has the above got to do with employers paying staff the 350 and asking them to do a full weeks work.
I don't have any problem with the subsidy and those company's that can pay and remain open, but you think it's alright for employers to pay their staff the bare minimum and ask them to work.
And by the way this shut down is not ending next week.

DartBhoy1888

Is the wage subsidy payment calculated from your average take home pay from Jan 1st to now? Trying to figure out how much my employer will be paying me. Any help much appreciated

Stratvs

DartBhoy1888 wrote: »

Is the wage subsidy payment calculated from your average take home pay from Jan 1st to now? Trying to figure out how much my employer will be paying me. Any help much appreciated

The basis is the average net for the first 9 weeks of 2020 (Jan/Feb)

collsoft

Stratvs wrote: »

I've done payroll for an employer who is closed where they are paying the employee their normal net. ie they have topped up the 70% subsidy to 100% normal net. Lets say it was €550 net. The employer gets €385 back from Revenue. So it costs the employer €165 net. The €165 net grosses up to say €200. The €200 is taxable but the €385 is not. So the person's tax credits more than cover the €200. That is resulting in a tax/usc refund to the employee of around €30. So the employee gets €550+€30=€580.

The €30 tax/usc refund is a problem as ultimately the €385 subsidy is taxable but can't be taxed in payroll under the scheme. So at the year end Revenue will be looking for that back by adjusting credits going forward. I'd have thought putting employees on W1/M1 basis would stop that happening and still leave employee with normal pay.

Hi Stratvs,

I first have to declare that I am the owner of CollSoft Payroll in case anybody thinks I am trying to hide who I am.

Your example above is incorrect and will result in the employer receiving a reduced subsidy from Revenue when reconciliation occurs.

If (Tax Free Payment + Employer Top Up > Average Net Pay) then Revenue will taper (reduce) the subsidy by the excess amount.

In your example, the top-up of €165 should not be "Grossed Up" to €200

The Average Net Pay in your example is €550

The Tax Free Payment you made is €385 which when you add €200 will be seen by Revenue as a payment of €585

This will reduce the subsidy from Revenue (at reconciliation) by €35

This employer will ultimately only receive €350 from Revenue not €385.

So in your example, the employer can only pay €385 non taxable and a taxable payment of €165.

The employee will not receive the "Average Net Pay" before tax refunds.

The scheme is not perfect, but any employer who tries to "Re-Gross" the Employer Top Up is in for a surprise down the road

capefear

collsoft wrote: »

Hi Stratvs,

I first have to declare that I am the owner of CollSoft Payroll in case anybody thinks I am trying to hide who I am.

Your example above is incorrect and will result in the employer receiving a reduced subsidy from Revenue when reconciliation occurs.

If (Tax Free Payment + Employer Top Up > Average Net Pay) then Revenue will taper (reduce) the subsidy by the excess amount.

In your example, the top-up of €165 should not be "Grossed Up" to €200

The Average Net Pay in your example is €550

The Tax Free Payment you made is €385 which when you add €200 will be seen by Revenue as a payment of €585

This will reduce the subsidy from Revenue (at reconciliation) by €35

This employer will ultimately only receive €350 from Revenue not €385.

So in your example, the employer can only pay €385 non taxable and a taxable payment of €165.

The employee will not receive the "Average Net Pay" before tax refunds.

The scheme is not perfect, but any employer who tries to "Re-Gross" the Employer Top Up is in for a surprise down the road

Hi Collsoft.

Could you explain what you mean on the last line about the re gross

Thanks a million

Stratvs

collsoft wrote: »

Hi Stratvs,

I first have to declare that I am the owner of CollSoft Payroll in case anybody thinks I am trying to hide who I am.

Your example above is incorrect and will result in the employer receiving a reduced subsidy from Revenue when reconciliation occurs.

If (Tax Free Payment + Employer Top Up > Average Net Pay) then Revenue will taper (reduce) the subsidy by the excess amount.

In your example, the top-up of €165 should not be "Grossed Up" to €200

The Average Net Pay in your example is €550

The Tax Free Payment you made is €385 which when you add €200 will be seen by Revenue as a payment of €585

This will reduce the subsidy from Revenue (at reconciliation) by €35

This employer will ultimately only receive €350 from Revenue not €385.

So in your example, the employer can only pay €385 non taxable and a taxable payment of €165.

The employee will not receive the "Average Net Pay" before tax refunds.

The scheme is not perfect, but any employer who tries to "Re-Gross" the Employer Top Up is in for a surprise down the road

Thanks for that, I understand the tapering issue now. Amounts I quoted were from memory as didn’t have the actual amounts in front of me (never a good idea). I see now the actual amounts in that case were €524 net ( same every week YTD). Single person normal crs/cop. My payroll calcs 70% Non-taxable at €366.80 and taxable gross pay of €157.20. Net comes in at €562.51 which is due to €38.51 in PAYE/USC refunds caused by taxable being less than crs etc. Does that sound right?

Won’t the PAYE/usc refunds cause problems later with the subsidy being taxable but not currently taxed? Would it be preferable if new RPNs issued for everyone on the scheme putting them on W1/M1 ?

Thanks help and clarification. With 4 x updates to the FAQ so far it’s hard to keep up.

ilovespudss

collsoft wrote: »

Hi Stratvs,

I first have to declare that I am the owner of CollSoft Payroll in case anybody thinks I am trying to hide who I am.

Your example above is incorrect and will result in the employer receiving a reduced subsidy from Revenue when reconciliation occurs.

If (Tax Free Payment + Employer Top Up > Average Net Pay) then Revenue will taper (reduce) the subsidy by the excess amount.

In your example, the top-up of €165 should not be "Grossed Up" to €200

The Average Net Pay in your example is €550

The Tax Free Payment you made is €385 which when you add €200 will be seen by Revenue as a payment of €585

This will reduce the subsidy from Revenue (at reconciliation) by €35

This employer will ultimately only receive €350 from Revenue not €385.

So in your example, the employer can only pay €385 non taxable and a taxable payment of €165.

The employee will not receive the "Average Net Pay" before tax refunds.

The scheme is not perfect, but any employer who tries to "Re-Gross" the Employer Top Up is in for a surprise down the road

One question. As you've explained above, if the employer tops up by more than the allowed top up amount, the subsidy is tapered. In the case where subsudy+top up+tax refund results in a net pay greater than the employees average net pay, is the subsidy tapered then? Will payroll need to reduce the top up amount to allow for the tax refund, so as not to exceed the employees average net pay?

highgiant1985

ilovespudss wrote: »

One question. As you've explained above, if the employer tops up by more than the allowed top up amount, the subsidy is tapered. In the case where subsidy+top up+tax refund results in a net pay greater than the employees average net pay, is the subsidy tapered then? Will payroll need to reduce the top up amount to allow for the tax refund, so as not to exceed the employees average net pay?

Allowing any Tax & USC refund through is fine and won't impact on the subsidy.

ERs will be refunded the subsidy + any tax/usc refund provided that the subsidy+top up amount hasn't exceeded Employees Revenues average net.

NB the Revenue average net pay is NOT net pay as you'd see on your payslip its your Gross Pay from all Jan/Feb payment submission less any statutory deductions / number of PRSI Weeks (capped at 9).

The collsoft website (they posted earlier in this thread) is really good in how they've a calculator on the front page that shows the subsidy amount and max top up possible:https://www.collsoft.ie/