A few updates following yesterday’s latest announcements which we have attempted to summarise below
A brief video explain this e mail is at this link - Explainer Video
1. Pandemic Unemployment Payment
This has now been increased to €350 per week. If you have already applied or received a payment at the lower rate there is no need to do anything further. While the support will now be in place for 12 weeks, you will still need to complete a jobseekers application within the first 6 weeks. This is open to employees who have been laid off (including part time workers or student workers) or self-employed who have ceased to trade as a result of the pandemic. If you have one adult and one or more dependent children you should claim a Jobseeker's Payment instead of the COVID-19 Pandemic Payment. This will be more beneficial. I attach a copy of this form for reference.
Wage Subsidy Scheme
On the face of it this appears to be a very welcome relief. It has been stated that any business that will be able to demonstrate that it has been significantly impacted by Covid-19 will be eligible. To demonstrate this a business will need to:
- Show at least a 25% reduction in turnover; and
- Inability to pay normal wages and normal outgoings fully;
The Scheme is confined to employees who were on the employer’s payroll as at 29 February 2020, and for whom a payroll submission has already been made to Revenue in the period from 1 February 2020 to 15 March 2020.
- If a business is eligible they will be entitled to a subsidy of 70% of the net wages of each qualifying employee up to a maximum of €410 per week. (e.g. a single person earning €38k gross would have a weekly take home of approx. €585 per week. The state will cover €410 of that. There are no taxes or Employers PRSI on the €410)
- Employers cannot use this as a way to increase take home pay of their employees
- Payments made through payroll from 26th March and employer will be refunded with 2 business days – NB – There is a certain process to follow when processing through payroll. Follow your payroll provider guidance.
- Employers can top up the 70%. PAYE and USC only will apply to any Top Up amount. The Employer PRSI on the top is 0.5%.
- The scheme is available for employers who retain staff on the payroll. Some of the staff may be temporarily not working or some may be on reduced hours and/or reduced pay. Provided the employer meets the eligibility criteria and subject to the levels of pay to the employees the employer may be eligible for the scheme for some or all of the employees.
- The names of all employers operating this scheme will be published on Revenue’s website in due course, after the scheme has expired.
- From April (Next week) , this scheme will move to a subsidy based scheme. Details of how this will be administered by revenue are due to be announced next week. It will be very interesting to see how revenue will assess the eligibility criteria.
Key Observations from Comerford Foley
- For pay periods that remain in March, the process will be a straight refund to employers. If your business has been impacted by 25% and you are unable to pay normal levels of payroll they your business would be eligible. Follow the guidance from your payroll provider
- From next week (April) revenue will issue guidance on the subsidy approach and how eligibility will be assessed – until that is released we only have the guidance here to go by - Revenue Guidance
- Ensure you have appropriate evidence and books and records maintained that will support any queries on this from revenue (sales reports by week, high level cashflow forecast for next number of weeks)
- It is unclear how revenue will consider excess cash reserves that a business may have pre Covid 19 when considering the “unable to pay normal wages and normal outgoings fully”
- It is unclear how Seasonal type businesses will be assessed for eligibility
- The extent that employees can remain working is unclear.
- It is hard to understand exactly why the names of the employers availing of the scheme will be published on the revenue website but you would imagine it is an attempt to ensure only genuine employers apply
3. SBCI Working Capital Loan
Details of this scheme have now also been made available on the SBCI website - https://sbci.gov.ie/schemes/covid-19-loan-application
- Loan amounts of up to €1.5m for SME’s impacted
- Loans at a max of 4%
- 3 year term
- Unsecured up to €500k
- Eligible if you meet the Covid 19 criteria (negative impact on turnover or profitability by 15%) and one of the innovation Criteria (extensive list on the website).
As ever feel free to contact anyone of the team with any queries and we will do our best to assist.