knowledge | 15 May 2020 |

COVID-19: Temporary Wage Subsidy Scheme

As part of measures announced by Government to provide financial support to workers affected by the COVID-19 crisis, Revenue will operate a Temporary Wage Subsidy Scheme (“TWSS”).  The TWSS enables employees, whose employers are affected by the pandemic, to receive significant supports directly from their employer. 

The TWSS was initially expected to last 12 weeks from 26 March 2020 until mid-June 2020.  However, in the Dàil on 7 May 2020, Taoiseach Leo Varadkar confirmed that the TWSS will be extended beyond mid-June 2020.  No precise date has been given for the ending of the TWSS but the Taoiseach has said that it is likely that the TWSS will be extended longer than the pandemic unemployment payment to encourage employers to take people back on.

The terms of the TWSS are set out in the Emergency Measures in the Public Interest (COVID-19) Act 2020 which was signed into law on 26 March 2020.

This briefing is based on version 11 of the Irish Revenue Frequently Asked Questions guide on the TWSS issued on 13 May 2020.

Key Features of the Scheme

  • The scheme replaces the COVID-19 Employer Refund Scheme which was applicable from 15 March 2020 until 25 March 2020.

Phase 1 (Transitional Phase)

  • Phase 1, the Transitional Phase, relates to all TWSS submissions received on or before 3 May 2020.  This phase built on the previous COVID-19 Employer Refund Scheme that was operational from 15 March to 25 March 2020, under which the employer received a refund of €203 per week for each employee that it kept on its books.
  • During the Transitional Phase, employers received a €410 subsidy per week for each employee that they made a PRSI Class J9 submission for, regardless of the amount of the subsidy actually paid to the employee.
  • Where the €410 Revenue payment in Phase 1 exceeds the maximum subsidy amount due in respect of that employee using the Phase 2 metrics the excess is refundable by the employer to Revenue.

Phase 2 (Operational Phase)

  • The Operational Phase applies to any TWSS submissions received on or after 4 May 2020.
  • Phase 2, the Operational Phase, will ensure that the subsidy paid to employers will be based on each individual employee’s Average Revenue Net Weekly Pay (“ARNWP”) (after tax, USC and PRSI have been deducted) and the gross pay as reported by the employer in the payroll submission, subject to the maximum weekly tax-free amounts.
  • An employee’s ARNWP is calculated using January 2020 and February 2020 payroll submissions made to Revenue for an eligible employee.
  • The subsidies available will be calculated as follows:

1. Where the ARNWP does not exceed €412, a subsidy of 85% of ARNWP, to a maximum of €350, is applicable.

2. Where the ARNWP is more than €412 but not more than €500; a subsidy of €350 is applicable.

3. Where the ARNWP is more than €500 but not more than €586, a subsidy of 70% of ARNWP is applicable to a maximum of €410.

4. Where the ARNWP is more than €586 per week but not more than €960 per week, the subsidy is calculated as follows:


% of ARNWP Subsidy available
Employee’s current gross pay not more than 60% of ARNWP Up to €350
Employee’s current gross pay between 60% and 80% of ARNWP Up to €205
Employee’s current gross pay over 80% of ARNWP No subsidy


5. Where the ARNWP is more than €960 per week, and current gross pay is below €960 per week, for payroll submissions made to Revenue on or after 16 April 2020, the subsidy is calculated as follows:


% of ARNWP Subsidy
Employee’s current gross pay not more than 60% of ARNWP Up to €350
Employee’s current gross pay between 60% and 80% of ARNWP Up to €205
Employee’s current gross pay over 80% of ARNWP No subsidy


  • Employers should pay no more than the normal weekly net pay of the employee.
  • The scheme will apply to employers who top up employees’ wages and those that do not.
  • Payment to employees should be made through the normal payroll process, with Revenue reimbursing employers within two working days.
  • The subsidy payments are liable to income tax on the employee, however this is not taxable in real-time through the PAYE system – rather the employee will be taxable on the subsidy amount paid to them by their employer by review at the end of the year.
  • Employer’s PRSI will not apply to the subsidy payment and the amount applicable to top-up payments will be reduced from 11.05% to 0.5%.

Employer Eligibility

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 and must make a declaration to this effect.  The declaration by the employer is not a declaration of insolvency. 

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 and may be based on, for example:

  • 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.

Another indicator is that the business is unable to meet normal wages or normal outputs.

An employer that has been hit by a significant decline in business but has strong cash reserves, which are not required to fund debt, can still qualify for the scheme.  However, Revenue guidance states that the government would expect the employer to continue to pay a significant proportion of employees’ wages in such cases.

After the scheme has expired, the names of all employers operating the scheme will be published on Revenue’s website.

Employee Eligibility

For employees to be eligible for the TWSS they must have been on the payroll as at 29 February 2020 and the employer must have made payroll submissions to Revenue in respect of them, between 1 February 2020 and 15 March 2020.  These criteria were revised by Revenue on 24 April 2020 and the TWSS can now be accessed if February 2020 payroll submissions were made to Revenue before 1 April 2020 and all previous months’ payroll submissions were submitted to Revenue before 15 March (once all other qualifying criteria are met).

The TWSS is also available where employees have been laid off as a result of COVID-19.  These employees can be taken back onto the payroll and will qualify for the subsidy if they were on payroll at the end of February.

Employers must not operate this scheme for any employee who is making a claim for duplicate support (e.g. Pandemic Unemployment Payment) from the Department of Employment Affairs & Social Protection (“DEASP”).  Where an employee previously laid off has been re-hired, the employee will qualify for the TWSS if their DEASP claim is ceased.

Eligibility for the Wage Subsidy Scheme

Application for the scheme currently is based on self-assessment principles.  Revenue will not be looking for proof of qualification at this stage, but may review eligibility in the future; thus employers should retain any evidence regarding their basis for applying for the scheme.

In any review of eligibility by Revenue, the critical requirement is to be able to show significant negative economic disruption due to COVID-19.  Revenue have given an illustrative, non-exhaustive list of proofs which may be considered relevant evidence demonstrating eligibility for the scheme:

  • if the decline in turnover was less than 25%, the business should retain documentation supporting its rationale for believing that it would suffer such a decline;
  • copies of documentation submitted to a financial institution as part of the negotiation of forbearance measures with the financial institution;
  • copies of notifications or communications to employees or trade unions or staff representative bodies of salary/wage cuts implemented as a direct result of the COVID-19 pandemic;
  • copies of documentation that show that any cash reserves in the business that are required to fund debt that is equal or greater than the reserve amount;
  • evidence of reliance on the Government Credit Guarantee Scheme or overdraft facilities or other borrowings for capital purposes; and
  • in the case of start-up businesses, for example, evidence of a decline in investment by at least 25% arising from the COVID-19 crisis.

How can we help?

McCann FitzGerald is ready and willing to assist clients in addressing all of their concerns in respect of legal and/or taxation issues business may face in responding to COVID-19.  Please contact any member of the McCann FitzGerald tax or employment teams and they would be happy to assist.


This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.

Key contacts