Dear Member,

It has been a busy week in the Retail Excellence office with the announcement of the increase in the Temporary COVID-19 Wage Subsidy Scheme and the Employer Covid-19 Refund Scheme. We acknowledge there are significant issues with the Revenue operated Refund scheme. We have been inundated with queries from members regards the scheme and we are fully aware of the frustration that the scheme has invoked.

The decision to increase the Covid Pandemic Unemployment Payment to a flat rate of €350 for everyone, is, on the one hand, an understandable step by Government to keep money in people’s pockets but it is also clearly a disincentive to work if your workplace has not closed.

It will make it very hard to recruit temporary staff to help out if needed and has impacted staff morale across the country. It has devalued working and given rise to a number of grievances from those employees still working hard, who are now viewing this Social Welfare payment as a more favorable option. This is either because as (i) as a part-time employee they will ‘earn’ more money through this Social Welfare flat rate than working, or (ii) they now view their weekly salary less favorably. This is particularly true when they deduct their costs and when they see others staying safe at home claiming €350 while they continue to travel to work.

From speaking with a number of businesses since this announcement, the negative impacts of the increase are clear to see and many employers have noted that certain employees are now asking to be laid off and more are threatening to resign so they can avail of Social Welfare, particularly as the form to apply for this payment does not require any information or confirmation from the employer.

Furthermore, Revenue is, disappointingly, stopping their ‘rebate’ facility whereby an employer could mirror welfare and give the Covid Pandemic Unemployment Payment via their payroll and get it back from Revenue the next day. Instead, Revenue is now running a ‘Temporary Wage Subsidy Scheme’ whereby qualifying employers can claim for 70% of an employee’s normal net wage up to a limit of €410 (€350 limit for net weekly wages between €586 and €960, and nothing permitted for wages over this)

The Government is even suggesting that employers take their teams off the Social Welfare €350 per week and instead give them 70% of their weekly wage, even though in many instances this makes the employee substantially worse off.

While the employer does not have to top up beyond 70%, many feel a moral pressure to do so.

The first major issue is a clear difference financially between the 2 schemes. For employees on less than €500 net per week, the Revenue 70% cannot compete with the ‘no questions asked’ €350 Social Welfare are promising people.

The other main problem is the lack of fine detail provided by Revenue to date and the nervousness this creates, as clear guidelines outlining the conditions associated with employers qualifying for this Wage Subsidy Scheme are yet to be published.

As advised, you have to sign a self-declaration and be able to demonstrate, to the satisfaction of Revenue, that you have lost 25% of your turnover AND have cash flow difficulties that make paying your outgoings and wages not possible due to Covid 19 difficulties.

Employers simply do not trust that they do qualify, or that Revenue would agree with them that they qualify later in the year, which may result in Revenue issuing demands of repayment and penalties. It is not clear how factors such as monies put aside (for stock, investments etc.) and turnover of parent companies would influence Revenue’s assessment of their financial standing.

For this reason in the past 48 hours Government policy, and a lack of clarity has led more and more employers who wanted to use the Revenue rebate model and help DEASP by mirroring their payment through payroll, shy away from the new Revenue Wage Subsidy Scheme and break ties with their employee. This is understandable as both parties seem financially better off with the employee claiming directly from DEASP and, furthermore, the employer does not have the stress or concern of justifying their financial position to Revenue either now or in the future.

This is causing frustration and downright anger amongst the small and medium employers of Ireland.

Rest assured, we have submitted your concerns and raised these issues to all relevant Government departments and we will continue to do so until this issue is recognized and resolved.

 

Please find more information about the schemes here: 

 

Temporary COVID-19 Wage Subsidy Scheme – Transitional Phase

https://www.revenue.ie/en/tax-professionals/ebrief/2020/no-0482020.aspx

 

COVID-19 Temporary Wage Subsidy Scheme – Employer Eligibility and Supporting Proofs

https://www.revenue.ie/en/corporate/communications/documents/guidance-on-employer-eligibility-and-supporting-proofs.pdf

 

Retail Excellence Team

Administration : Retail Excellence
Offices: Ennis & Dublin, Ireland | T: 00 353 65 6846927 | W: www.retailexcellence.ie | E: antoinette@retailexcellence.ie
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