As cases of Covid-19 continue to spread and the Irish Government has ordered all non-essential businesses to close and introduced new measures to support employers to meet their legal obligations to employees.

Temporary Wage Subsidy Scheme for qualified employers

The Government has announced a Temporary Wage Subsidy Scheme (the "Subsidy Scheme") which will be available to qualified employers who continue to pay "laid off" employees or employees on short-time working their usual wages or a significant portion of their usual wages throughout the period of the Covid-19 pandemic. The aim of the Subsidy Scheme is to retain employees' employment relationship with their employer and therefore alleviate the need for these employees to personally submit a claim for unemployment allowance. The Subsidy Scheme will refund employers up to a maximum of €410 per qualifying employee per week for a maximum of twelve weeks from 26 March 2020. The Subsidy Scheme will apply both to employers who top up their employees' wages and those that are not in a position to do so.

To qualify for the Subsidy scheme, employers must:

  • be experiencing significant negative economic disruption due to 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
  • register with Revenue for the Subsidy Scheme or have already registered for the Employer Refund Scheme which is being replaced by the Subsidy Scheme

In order to register for the Subsidy Scheme, employers will have to self-declare that they meet the qualifying criteria set out above. Helpfully, Revenue has clarified that this declaration by an employer is not a declaration of insolvency, which could have consequences for the directors of a business and their duties to that business. The Revenue has clarified that this self-declaration by an employer is simply a declaration which states that, based on reasonable projections, there will be, as a result of disruption to the business caused or to be caused by the Covid-19 pandemic, a decline of at least 25% in the future turnover of .the business for the duration of the pandemic and that as a result the employer cannot pay normal wages and outgoings fully but nonetheless wants to retain its employees on the payroll. The Revenue has stated that employers that have been hit by a significant decline in business but have strong cash reserves, that are not required to fund debt, will still qualify for the Subsidy Scheme but that the Government would expect these employers to continue to pay a significant proportion of their employees' wages.

Employers who avail of the Subsidy Scheme will make the subsidy payments to their employees through their normal payroll process and will be reimbursed by Revenue within two working days of notification of the payments to Revenue.

In April, the Subsidy Scheme will move to a subsidy payment based on 70% of the weekly average take home pay per employee up to a maximum of €410. Income tax, USC, employee PRSI and employer PRSI will not apply to the subsidy payment. Employee PRSI will also not apply to any top up paid by the employer and employer PRSI will be reduced from 10.5% to 0.5% for any top up paid by the employer.

The Department has also introduced a new Covid-19 Pandemic Unemployment Payment for employees who have been laid off due to the impact of Covid-19 and who are not receiving any payment from their employers. This payment will be paid for a period of twelve weeks at a flat rate of €350 per week upon submission of a simplified one-page application to the Department. Once the twelve week period has elapsed, individuals may apply for normal Jobseekers Allowance if necessary and the correct rate for individuals will be assessed at that time.

The Department of Employment Affairs and Social Protection (the "Department") has published helpful guidelines outlining employer obligations and employee rights online which can be accessed here.

These guidelines contain details of new measures, which are designed to support workers and ease the burden on businesses if employees cannot attend work due to the impact of Covid-19.

Sick pay

Although this recent Government announcement will undoubtedly increase pressure on employers to pay employees' wages during absences caused by the Covid-19 infection and/or self-isolation, it does not create a legal obligation on employers to do so.

If the employee is not actually sick and self-isolating as a precautionary measure they may not be entitled to sick pay. If an employee is sick, there is no statutory requirement on Irish-based employers to pay employees during sick leave. Arrangements for employees who contract Covid-19 should be in accordance with the contract of employment or their employer's sickness policy. Employees may also have an entitlement to sick pay as a result of an established custom and practice by the employer. For instance, employers who operate a discretionary sick pay policy but who routinely pay employees while on sick leave may be held to have created an enforceable contractual right to sick pay for its employees.

Illness Benefit

Employees who are absent from work due to illness may be entitled to Illness Benefit from the Department provided that the employee has made sufficient PRSI contributions

Employees normally only receive Illness Benefit from the sixth day of absence. However, as part of the Department's new measures, the rules relating to Illness Benefit have been modified. In circumstances where the employee has been told by a doctor to self-isolate or has been diagnosed with Covid-19 and the employer does not pay sick pay, employees will be entitled to Illness Benefit from the first day of absence. Illness Benefit will be increased from a maximum payment of €203 per week to a payment of €350 per week for a maximum of twelve weeks of medically certified self-isolation or the duration of a person's medically-certified absence from work due to a positive diagnosis of Covid-19.

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