On 13 October, the Irish Government announced its Budget for 2021 which contains a number of important changes for Irish based employers.

Three Week Increase to Parents' Benefit

An employee's entitlement to Parents' Benefit will increase from two weeks to five weeks from April 2021. This change will apply to parents of children born or adopted from November 2019. A qualifying employee's entitlement to Parents' Benefit will similarly increase to a total of five weeks. Parents' Benefit is paid by the Department of Employment Affairs and Social Protection to qualifying employees at a rate of €245 per week.

Employers should review their Parents' Leave policy to reflect this change once it is in force. Employers should also bear in mind this increased entitlement to Parents' Leave in business planning and managing employee resources.

Illness Benefit

Illness Benefit will be payable by the Department of Employment Affairs and Social Protection to qualifying employees who are absent from work due to an illness or injury from the third day of absence. Previously, employees could only be paid from the sixth day of absence. This change will come into effect for all new claims from February 2021.

Employers should encourage employees to apply for Illness Benefit from their third day of absence. Employers who pay employees during sick leave should review their sick pay policy and consider including a condition for payment that employees are required to take appropriate steps to reimburse their employer in respect of any Illness Benefit to which they are entitled.

Employment Wage Subsidy Scheme and the Temporary Wage Subsidy Scheme

The Employment Wage Subsidy Scheme (“EWSS”) will run until 31 March 2021. Under the EWSS, qualifying employers can receive €203 per week for every eligible employee whose gross weekly remuneration is between €203 and €1,462 and €151.50 for every employee whose gross weekly remuneration is between €151.50 and €202.99. Eligible employees are employees who are being retained to their employer's payroll during the COVID-19 Pandemic but who are on temporarily laid off or who are on reduced pay or reduced hours. To qualify for the EWSS, an employer must self-declare to Revenue that it has experienced significant negative economic disruption due to COVID-19, with a minimum of 30% decline in turnover or customer orders (between July and December 2020 compared with the same period in 2019).

Employers who received excess amounts under the Temporary Wage Subsidy Scheme and who are unable to repay the excess immediately, due to the impact of Covid-19 on their business, can avail of a tax debt warehousing scheme. The tax debt warehousing scheme will allow such employers to defer payment for a year with no interest applying. Interest will apply thereafter at a rate of three percent.

Minimum Wage and Employer PRSI

Minimum wage for employees over 20 years of age will increase from €10.10 to €10.20 from 1 January 2021.

As widely reported in the media, there were no changes to income tax rates or bands.

From 1 January 2021 the weekly income threshold for the higher rate of employer's PRSI will increase by €4 from €394 to €398.

Pension

The State pension age will remain at 66 from January 2021. It had been due to increase to 67 in 2021. Further legislation is expected to be implemented by the end of the current year. It was announced that a Pensions Commission will be established to examine a range of issues including contributions, calculation methods, sustainability, eligibility and intergenerational fairness and to ultimately make a recommendation on a State pension age to be considered by the Government in due course. It appears unlikely that this maintenance of the status quo will affect the increasing number of requests being made by employees to work beyond their contractual retirement age.

Remote Working

Although no changes were made to income tax rates or bands and no additional supports were introduced to address the significantly increased number of employees working from home, the Government committed to developing a strategy for remote working so further measures are likely to enhance the current limited tax credits available to remote workers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.