Temporary Wage Subsidy Scheme explainer

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The Irish government recently announced a new support for businesses and employers in the form of the Temporary Wage Subsidy Scheme. The aim of the scheme is to keep as many workers as possible in employment until the COVID-19 crisis passes.

What is the Temporary Wage Subsidy Scheme?

The Temporary Wage Subsidy Scheme aims to avoid mass redundancies during the COVID-19 crisis.

The government is encouraging businesses to keep as many employees as possible on their payrolls. They will support any businesses wishing to do so through the scheme.

The Temporary Wage Subsidy Scheme replaces the COVID-19 Pandemic Refund Scheme. So, if your business has already used this refund scheme, you will automatically be registered for the Temporary Wage Subsidy Scheme.

Who can avail of the Temporary Wage Subsidy Scheme?

It’s available to employers who demonstrate that they have been attempting to retain and pay staff but are unable to do so because their turnover has been so badly affected by the crisis.

The Revenue will administer the scheme and to qualify, employers must:

  • Be experiencing significant negative economic disruption as a result of COVID-19.
  • Be able to demonstrate, to the satisfaction of Revenue, a minimum of a 25% decline in turnover.
  • Be unable to pay normal wages and normal outgoings fully.
  • Retain their employees on the payroll.

Furthermore, your employees must have been on your payroll for the last PAYE period in February for you to qualify.

How much of an employee’s salary is paid?

The scheme is divided into classes:

  • For employees earning up to €586 per week, the state subsidy is 70% or €410 per week.
  • For employees earning between €586 and €960 per week, the state subsidy is yet to be decided.
  • For employees earning more than €960 per week, no subsidy will be payable.

Unemployment Payment increased in rate of pay and duration

The COVID-19 Pandemic Unemployment Payment has also increased to €350 per week. This is available to all employees and self-employed who have lost their jobs due to the crisis.

Many employees may have lost their jobs and already applied for this benefit. They will automatically receive the increased rate of €350 per week.

The COVID-19 Pandemic Unemployment Payment will remain in place for the duration of the crisis.


As it stands, the state wage subsidy is not subject to income tax under the PAYE system. This means it will be put through payroll as a non-taxable payment.

In addition, there will be no PRSI payable on the state wage subsidy.

The reduced rate of 0.5% Employer’s PRSI and 0% Employee’s PRSI (Class J) will be applied to any top-up payments given by employers.

Welcome change to redundancy laws

A major concern for employers during the COVID-19 crisis is that they may face redundancy claims. The government has now forbidden employees who have been laid off or put on short time during the crisis from making redundancy claims until May 31st, 2020 (or any extended period).

However, the risk of mass redundancies may still be the biggest concern for employers in the worst-hit sectors.

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