Temporary COVID-19 Wage Subsidy Scheme

27 April 2020

The Temporary Wage Subsidy Scheme (TWSS) was introduced on 26th March 2020 to provide income support to eligible employees where the employer’s business activities have been negatively impacted by the COVID-19 (Coronavirus) pandemic.

The aim of the scheme is to maximise staff retention and firm viability by maintaining the link between the employer and employee. The rate is set with respect to previous average net wage levels.


Summary of the Scheme

The new scheme will be operated in two phases.

Phase 1 is a transitional phase during which employers will be refunded up to a maximum of €410 for each qualifying employee from 26 March 2020.

However, it is important to note that, where the €410 Revenue payment in Phase I exceeds the maximum subsidy amount due in respect of that employee using the Phase II metrics (e.g. because it exceeds 70% the average net weekly pay for that employee), the excess is refundable by the employer to Revenue.

It is anticipated that this clawback will be offset against subsequent refunds due to the employer.

In Phase 2, no earlier than 4 May 2020, the operation of the scheme will ensure that the Subsidy paid to employers will be based on each individual employee’s Average Revenue Net Weekly Pay, subject to the maximum weekly tax-free amounts. Revenue have advised that further guidance will issue on how these arrangements will work in the near future.

Revenue have stated that “Average Revenue Net Weekly Pay” should be calculated as follows:

  • Take the employee’s Gross pay for every pay period in January and February 2020
  • Subtract the Income Tax Paid, USC Paid and Employee PRSI Paid
  • Total this figure for each pay date in January and February 2020 and divide this by the number of insurable weeks (capped at 9) for the period.
  • This gives you the employee’s average pay that is to be used for the subsidy amount.

“Gross pay” means total remuneration which includes emoluments and notional emoluments but without reference to any deduction for pension contributions payable by the employee or any salary sacrifice deduction. Bonuses and once off payments received in January and February 2020 will be considered gross pay for purposes of computing the Average Net Weekly Pay.

The Subsidy will be operated through employers’ payrolls (similar to the previous COVID-19 Refund Scheme).

Revenue anticipate that reimbursement will be, in general, made to the employer’s bank account within two working days of receipt of the employer’s payroll submission.

Unlike the previous scheme, employers will be allowed to top up this payment. However, in order to receive the full subsidy, the top up, combined with the Subsidy, must not exceed the Average Net Weekly Pay. Such top up amount will be considered gross pay and liable to PAYE and USC. If the employer makes an additional payment  in excess of the above, then the subsidy value refundable to the employer will be reduced by this excess amount when the refund reconciliation is being performed.

The net effect of the new scheme is that eligible employees will be able to receive the following subsidy up to 4 May 2020.

Average Revenue Net Weekly Pay ('ARNWP') Subsdiy
Less than €586 per week Up to €410
Between €586 and €960 Up to €350


For payroll submission made on or after 16 April 2020, with a pay date on or after 16 April 2020 the wage subsidy is available to support employees whose ARNWP was greater than €960, and their current gross pay is below €960 per week, subject to the tiered arrangements and tapering.

Where the current gross pay, as reported in the payroll submission, represents a reduction from the ARNWP by:

  • less than 20%, no subsidy is payable
  • between 20% and 39%, a subsidy of up to €205 is payable
  • 40% or more, a subsidy of up to €350 is payable

For such employees, the maximum additional payment an employer can make, to receive the full subsidy, is the difference between €960 and their maximum weekly wage subsidy.

The position for eligible employees, with an ARNWP of less than €586, with effect from 4 May, will be:

ARNWP Subsidy
Less than €412 per week 85% of ARWNP
Between €412 and €500 €350
Between €500 and €586 70% of ARWNP


The position for employees with an ARNWP greater than €586 per week will be:

Gross top up amount paid by employer Subsidy
Up to 60% OF ARNWP Up to €350
Between 60% and 80% of ARNWP Up to €205
Over 80% of employee’s previous ARNWP No Subsidy


Any PAYE and USC refunds that arise as a result of the application of tax credits and rate bands can be repaid by the employer and Revenue will also refund this amount to the employer along with the associated wage subsidy. Such refunds should not be included in the employer’s calculation of the allowable top up payment.

Neither PAYE nor USC will be applied to the subsidy payment through the payroll process. However any employer top-up payments should be subject to both PAYE and USC.

Employee PRSI will not apply to the subsidy or any top up payment by the employer.

Employers PRSI will not apply to the subsidy and will be reduced from 10.95% to 0.5% on the top up payment.

While the subsidy payment will not be subject to PAYE, USC or PRSI (for both employer and employee), it will remain taxable in the hands of the employee. Revenue have stated that any taxes due, that are not covered by unutilised credits in the year, will be collected by reducing the employee’s tax credits for a future year or years in order to minimise hardship.

Employers availing of the Scheme can suspend the operation of BIK for eligible employees for the period that the employee is on the scheme. For employees covered by this scheme, BIK or notional pay does not need to be included in Gross Pay. However the notional pay will be liable to income tax and USC on review at the end of the year. We understand these taxes will be collected directly from the employee by coding the liability into future year(s) tax credits.


Qualifying Conditions

To qualify for the scheme, employers must:

  • be experiencing significant negative economic disruption due to Covid-19
  • be able to demonstrate, to the satisfaction of Revenue, a minimum of a 25% decline in turnover or in customer orders received in Q2 2019
  • be unable to pay normal wages and normal outgoings fully,
  • retain their employees on the payroll, and
  • have the firm intention of continuing to employ their employees, and making best efforts to pay the employee some of their earnings.


Eligible Employee

An eligible employee is someone who their employer cannot afford to fully pay because of the COVID-19 crisis, was on the employer’s payroll on 29 February 2020, whose pay and tax details were reported to Revenue in Qualifying Payroll Submissions and is being kept on the employer’s payroll.

For pay dates prior to 24 April 2020, the employer must, for any pay-dates during the month of February 2020, have made payroll submissions for payments to the employee to Revenue before 15 March 2020.

For pay dates from 24 April, the employer must, for any pay-dates during the month of February 2020, have made payroll submissions for payments to the employee to Revenue before 1 April 2020.

Submissions that are amended or delated after the above dates (15 March & 1 April) are invalid.

An employee is not an eligible employee if their gross pay, as reported in their payroll submission, exceeds €960 per week, or the sum of payments (subsidy plus any additional payment but excluding tax refunds) payable to the employee, in the week being processed, exceeds the Average Revenue Net Weekly Wage.


Employer Eligibility and Supporting Proofs

The scheme is available to employers across all sectors (excluding Public Service and Non-Commercial Semi-State Sector). To qualify for the scheme employers must be experiencing significant negative economic disruption due to COVID-19.

Revenue expect employers availing of the Scheme to make best efforts to maintain the employee’s net income as close as possible to normal net income for the duration of the Scheme period.

Employer eligibility will be on a self-assessment basis but with a requirement to make a declaration when applying for the Scheme.

The employer declaration is a statement to the effect that based on reasonable projections, there will be, as a result of COVID-19, a decline of at least 25% in the future turnover of, or customer orders for, the business for the duration of the pandemic and that as a result the employer cannot pay normal wages and outgoings fully but nonetheless wants to retain its employees on the payroll.

It should be noted that, in Revenue’s opinion, the declaration by the employer is not a declaration of insolvency.

In relation to the ‘inability to pay normal wages’, Revenue expect an employer with ‘strong cash reserves’ to pay a significant proportion of the employees’ wages over the period of the Scheme. While there is limited guidance on this point, it is helpful that Revenue do restate their expectation that employers will make best efforts to maintain the employees’ normal net income position, when addressing the point on cash reserves.

On this basis, it seems reasonable that employers with ‘strong cash reserves’ who top-up employees to their average normal net weekly wage would meet the expectation of paying a ‘significant proportion’.

Revenue have stated that key indicators that an employer is experiencing significant negative economic disruption would be indicators such as a decrease or likely decrease in employer’s turnover by 25% in Q2 2020.

This reduction is to be determined by the employer on a self-assessment basis and there is no requirement to make any upfront submissions to Revenue. Revenue have indicated that this determination may be based on:

  • Decline in orders in March 2020 compared to February 2020;
  • Likely turnover of Q2 2020 compared to Q1 2020;
  • Likely turnover of Q2 2020 compared to Q2 2019; and
  • Any other basis that is reasonable if the employer is not capable of applying the above tests.

Revenue have stated that there will be a risk focused follow up verification involving an examination of relevant business records where that is considered necessary. Relevant checks include:

  • the employer has applied to operate the scheme,
  • all eligible employees are included on a qualifying payroll submission
  • the eligible employee was on the payroll as of 29 February 2020, and
  • the employer has paid the full subsidy amount to the employee.
  • Revenue is sharing data with DEASP who will use this to identify dual payments and will cease future DEASP COVID-19 Pandemic Unemployment Payments (PUP) payments for employees that are benefiting from the wage subsidy scheme.


Further details of the scheme can be found at:

Revenue’s COVID-19 information and advice for taxpayers and agents: https://revenue.ie/en/corporate/communications/covid19/temporary-covid-19-wage-subsidy-scheme.aspx

FAQs on the operations of the Transitional phase of COVID-19 TWSS: https://www.revenue.ie/en/employing-people/documents/pmod-topics/guidance-on-operation-of-temporary-covid-wage-subsidy-scheme.pdf

Guidance on COVID-19 TWSS Employer Eligibility and Supporting Proofs: https://www.revenue.ie/en/corporate/communications/documents/guidance-on-employer-eligibility-and-supporting-proofs.pdf