Employer COVID-19 Refund Scheme

The Department of Employment Affairs and Social Protection (DEASP) has announced the introduction of a new Covid-19 unemployment payment. To ensure that all affected employees can be paid the amount without delay, Revenue is allowing employers to make this payment to their employees through the normal payroll process and seek direct repayment of the amounts due from Revenue.

Summary of the scheme

The new payment is available to employees and the self-employed who have lost employment as a result of the COVID-19 pandemic. There is a simplified one-page application form for the payment and the payment will be made at a rate of €203 per week. Instead of an employee claiming the payment directly from the DEASP, an option is available to employers to facilitate the payment of the scheme through payroll. This will be available in the following circumstances:

  • where the employer has temporarily laid-off staff as a result of the pandemic
  • where the employee is still currently on the employer’s payroll, that is, where notification of the cessation of employment has not been sent to Revenue
  • where the employee was included on a Revenue payroll submission in the period from 1 February 2020 to 15 March 2020
  • where the employer is unable to make top-up payments to the employee over and above the weekly €203 amount.

The payment to the employee of this amount is not an emolument and it is to paid gross without deductions, e.g., income tax, PRSI, USC, LPT etc.

The amounts paid to employees and notified to Revenue will then be transferred into the employer’s bank account by Revenue. This reimbursement will, in general, be made on a ‘next day’ basis. Payments to employers to eligible employees from Monday 16 March 2020 will be refunded. Refund payments are expected to commence from Tuesday 24th March.

The refund scheme is expected to operate for an initial six week period, however, the duration may be reviewed.

What employers should do

Employers who are up-to-date with their Revenue payroll submissions can operate the scheme. If an employee, identified with their PPSN, was not included in a payroll submission reported to Revenue between 1 Feb 2020 and 15 March 2020 with a pay date between 1 Feb 2020 and 15 March 2020, then the employee is not eligible and employer will not be refunded the payments made to this employee.Should an employer wish to make a payment of this amount to its employees, it can do so by making an application to Revenue through the Revenue Online Service. Revenue has issued practical guidance on the processing of the payment through the payroll system and employers should seek assistance from their payroll software provider should any issues arise when making the payment.

The employee must confirm to the employer that they have not, and will not, claim a payment from DEASP whilst the employer makes this payment through the payroll.

It should be noted that payment of the amount via an employer is a transitional arrangement. An employee should be advised by their employer to make a Jobseeker’s Benefit claim through the MyWelfare.ie online portal. If that is granted, future payments will be made by the DEASP, including any arrears above the €203 and the employer should then cease making the payments. If an employee is entitled to additional benefits, e.g. dependent children, then the employee will need to apply to DEASP for job-seekers payment adjusted for the additional entitlements. Such employees can use the Revenue refund scheme to receive €203 per week until the registration with DEASP is complete.

Application process

Employers, or their agents, should apply to Revenue to operate the scheme by carrying out the following steps:

  1. Logon to ROS and in Manage bank accounts, Manage EFT check that the refund bank account details for PAYE-Emp are correct.
  2. Logon to ROS/myEnquiries
  3. Input Employer registration number
  4. Select the category “Employer COVID -19 Refund Scheme”.
  5. Accept the enclosed declaration.

Revenue will issue a ROS notification acknowledging receipt of the declaration and this should be retained by employers.

Payment details

Please note the following clarifications issued by Revenue in relation to the refund payments:

  • Refunds are made for whole weeks only, that is, there are no proportional payments for part weeks
  • No other payment amounts can be made by the employer to the employee for the week of the scheme refund payment. If the employer wishes to make additional or top-up payments to employees, the employee must register directly with DEASP. 
  • If the employee is due outstanding payments prior to being laid off, such as back pay, holiday pay, etc., this must be reported in a payroll submission for a week other than the refund scheme week. These payment should be subject to PAYE withholdings as required.
  • All employees are eligible for only one payment of €203.00 per week.
  • Where an employee:
    • has multiple employments, either with one or multiple employers or
    • Is in receipt of Jobseekers Benefit or
    • Is in receipt of the Covid-19 payment directly from the DEASP,

the employee should notify the employer and the payment should be stopped by the employer immediately. If an employee receives more than one payment of €203 then Revenue will subsequently detect this duplicate payment and the employee will have to reimburse the overpayment.

If the employee is laid off and the employer wishes to continue an existing value BIK arrangement (e.g. modest health insurance) on the expectation that the employee will resume work then the employer can allow the employee to use the scheme but the employer will be required to report and tax the BIK benefit at a later stage. Full records of BIK must be maintained

Making payroll submissions

When processing payroll, an employer must enter the following details for each eligible employee:

  • PRSI Class set to J9
  • A taxable pay amount of €0.01 (to allow the payroll calculate tax credits)
  • A non-taxable amount of €203.
  • No other payment amounts are made by the employer to the employee and all temporarily laid off employees are paid the €203
  • The payroll submission must include pay frequency and period number

If the employee(s) resumes employment with the employer, or obtains other supports from DEASP, or secures employment elsewhere, the employer should not include the employee(s) concerned in future submissions.

If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars employment tax team below:

 

Position

Email

Telephone

Ken Killoran

Tax Partner

kkilloran@mazars.ie

01 449 4451

John Kelly

Tax Director

John.kelly@mazars.ie

01 449 4495

Other Contacts

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