Wednesday, 23 September 2020
Nithe i dtosach suíonna - Commencement Matters
Wage Subsidy Scheme
I thank the Minister of State for coming to the House to take this debate. I wish him every success in his new role. I know what an honour it is.
I ask that the Minister, the Department for Finance and, more specifically, the Revenue Commissioners conduct a full review into how Aer Lingus operated the wage subsidy scheme from March 2020 up to September 2020, when the replacement employee wage subsidy scheme, EWSS, was introduced. The Minister of State may be aware that I had a small part in the establishment of the wage subsidy scheme in March. It was established to maintain a connection between employees and their employers during what we believed to be temporary difficult times, which we now know will last a lot longer. Staff needed to be temporarily laid off, not working or on reduced hours. In order to apply the wage subsidy scheme, companies needed to be able to show a 25% reduction in their overall turnover, which Aer Lingus could certainly have done given that international travel crashed overnight. It is particularly pertinent that an employee receiving the wage subsidy payment whose work was reduced to three days or fewer a week could also apply for the short-time working scheme, one of the other income supports available from the Department of Employment Affairs and Social Protection.
The detail of the operation of the wage subsidy scheme was tailored around the cohorts we knew would lose their work. Up to a maximum of €410 per week could be reclaimed for each qualifying person and a flat rate of €350, which matched the rate of the equally important pandemic unemployment payment, PUP, which was introduced at the same time, could be claimed by the employer for each employee.
Aer Lingus is a blue chip company in this country and, although it is no longer owned by Irish interests, it is an organisation for which we have great respect and grá. Every single Irish person connects and identifies with that shamrock on the end of each of its planes. We expect a certain level of interaction with employees from such a blue chip company and for it to treat its employees a certain way. The representations I have got from those employees over recent weeks regarding how they were dealt with and, particularly, how the wage subsidy scheme was operated are absolutely heartbreaking to read. People tell me their earnings dropped to as little as €317 per fortnight, which beggars belief when the minimum payment was €350 per week.They tell me that it is by far the most stressful and time-consuming battle that they have ever experienced with their employer. I have been told that what is failing to be mentioned is the amount of hurt and damage it is having and the effect it is having on employees. Never before has people's mental health been so heavily affected by the sheer lack of empathy and professionalism of a company towards its employees. A man said that to say it has been difficult is an understatement, and it has been for everybody. Employees should have been entitled to claim the part-time payment from the Department of Employment Affairs and Social Protection since the end of March, as was clearly stated and continues to be so by the Revenue Commissioners. A lady who works in ground operations told me that she has never received the full Covid payment, as the company has been deducting her parental leave from her payment. She asked if Aer Lingus was claiming the full Covid payment for her.
That is why I am asking the Minister of State for a full review to be conducted by the Revenue Commissioners and for the publication of the compliance reports that the Revenue Commissioners would have completed on Aer Lingus over recent months. One of two things has happened. One is that the allocation of the J9 PRSI classification, which was part of the wage subsidy scheme at the beginning, forced Aer Lingus into a position of not being able to sign the documents required for all of those people who were earning only 50% or 30% of their pre-Covid payment wages to be able to access the short-time working scheme. If that is the case, then it was an error in the application of the short-time working scheme in co-operation with the wage subsidy scheme. It is incumbent upon Revenue to reflect on the operations, and maybe not just for Aer Lingus but for many other companies. The other thing that may have happened, which is more sinister but is as is felt, and it is unfortunate that employees would feel this about their own organisation, is that the full balance that was reclaimable by Aer Lingus for and on behalf of the individual employees was claimed but just was not passed on to the employees.
It is as important for Aer Lingus to prove that that is not the case as it is to have a look at the J9 PRSI classification to ensure that the company's employees would able to access the short-time working scheme. Therefore, I am asking for a full review to be conducted by the Department of Finance and the Revenue Commissioners into the operation of the short-time working scheme and the wage subsidy scheme on behalf of Aer Lingus from March to September 2020.
I thank Senator Doherty for raising this very important issue. It is clear from listening to the Senator that she has immense knowledge on this particular issue and first-hand experience of same. I, too, in my constituency clinic have had employees of Aer Lingus bringing precisely the issues that the Senator has raised. The travel industry was very seriously affected by the Covid-19 situation and continues to be so. Aer Lingus has also been very seriously affected, as has all its staff.
The temporary wage subsidy scheme, TWSS, was in place for the 22 weeks between 26 March and 31 August 2020. It was introduced only as an emergency income support for employees of vulnerable firms where turnover had declined by at least 25%, which was the case with Aer Lingus. Under the TWSS, income support was paid via the employer, as Senator Doherty stated, to maintain the link between the employee and the employer insofar as was possible, and the amounts were refunded to the employer by the Revenue Commissioners, who administered the scheme on behalf of the State. I know, generally, once a claim was submitted to Revenue, within 48 hours a refund tended to be paid.
I want to advise the Senator that under section 851(a) of the Taxes Consolidation Act 1997, Revenue is precluded, by reason of its taxpayer confidentiality obligations, from providing any details on individual taxpayers, including the company in question. I will return to that matter specifically, because the Senator has asked for a review to be published on that matter. I will, therefore, be speaking generally on the issues that relate to workers who were paid via the TWSS
. It is my understanding that concerns have been raised that employers may not have passed on to their workers the full value of the subsidy that they claimed. I assure the Senator that, by design, it is not possible for an employer to claim more of the subsidy than was paid to the employees. That is the nature of the actual scheme, and it is because the system that was used to make the payment was built using the employer payroll returns to Revenue from earlier in the year. It is not possible, therefore, that an employer could have withheld the subsidy from their workers. The employer was required to include the amount of the subsidy on the employees' payslips. I will return to the question of whether that issue did arise, but that is the general rule that Revenue will clearly look at. Employers were required to download the information provided by Revenue.
It is important to state that there was no obligation on any employer in the country, under the TWSS, to claim the maximum amount of the subsidy for an individual employee.It is important that they would all be encouraged to do so but an employer could have a particular reason not to claim the entire allowable amount. That would be a difficult issue for the employees concerned but there is not a legal obligation to claim the maximum subsidy. Under section 28 of the emergency measures legislation, the employer was expected to make the best effort to maintain the employee's net income. We will come to the issue of deductions from net income separately. This could have an impingement in respect of employment rights and entitlements. If an employee has a particular issue, such matters are more appropriate for the Workplace Relations Commission. It is important that where there are issues between an employer and an employee, Revenue is not a substitute for the Workplace Relations Commission. The Revenue Commissioners cannot be expected to adjudicate on those issues. They do a great job and have a big job to do. The issue of employees' rights is a matter between the employer, the employee and the Workplace Relations Commission. I am advised by Revenue that where a business was clearly not eligible for the scheme or failed to pay the correct level of subsidy, that amount can be fully reclaimed from that employer. While I am not specifically referring to this company, Revenue is carrying out an in-depth review of all companies for a more in-depth examination. If there is abuse of the system there will be very serious consequences for the employer concerned.
I thank the Minister of State and welcome his assurances that in the way it is designed, the wage subsidy scheme could not allow somebody to claim more than they would pass on to an individual employee. That is really welcome. It would be reassuring for the employees of Aer Lingus to know that whatever was claimed in their name was given to them. However, while I know the Minister of State is saying there is no legal obligation that they would have to claim more, it absolutely beggars belief when free money was available to an organisation that was specifically put in place to help support people through a difficult time, it would not be claimed on the behalf of their employees. The employer took the route of putting them down to 50% of their pre-Covid salary, and then in June down to 30% of it, when the money was being made available by the State to keep these people on a minimum standard of living. They actually would have been better off letting all of those people go who were earning under €39,000, which is the vast majority of the people in Aer Lingus, and allowing them claim the pandemic unemployment payment, PUP. It is no reflection on the Minister of State or the Department but it really calls into question whether we should be thinking about Aer Lingus as a blue-chip employer.
Going back to the wage subsidy scheme, when employers denoted their employees as J9, this was the classification we made up so that they would not be paying USC, PRSI or any of the other social insurance taxes. We specifically said that J9 PRSI claimants were working seven days, which means they will never be able to claim the short-time working scheme from March until September. There would have to be a review or some help from the Revenue Commissioners to allow these people to go back and claim access to a support system that is based on demand. I ask the Minister of State to go back to the Revenue Commissioners and the Minister to see if there is any way we can help these employees. Leaving aside Aer Lingus and whatever it did or did not do for and on behalf of its employees, the State has a responsibility to recognise that people cannot live on €317 a fortnight. It is just not possible. We as legislators would not expect them to do so which is why the PUP was introduced at €350 and now reduced to €300 a week. I ask the Minister of State to bring that request back to the Revenue Commissioners and the Minister.
I take on board everything the Senator has said. I hope the Revenue Commissioners and especially the Department of Employment Affairs and Social Protection are listening. I get what the Senator says about how the scheme was designed. My comments are general comments. I am not saying they are specific to Aer Lingus but I am sure the people in Aer Lingus will be listening closely to what I have to say. There may be confusion on the part of some employers. They may have mistakenly assumed that they cannot claim the TWSS and the PUP alongside any other social protection payment. In many cases, employees would have been entitled to the short-term social welfare payment but maybe the employer was not sufficiently au faitwith the social welfare legislation. I understand that it has led to a lot of confusion for some companies. Some employers have given letters to the Department of Employment Affairs and Social Protection saying they now understand that there would have been an entitlement under the short-term social welfare payment but not under the PUP. Those claims are in the system and I believe once the claims are in the system they should be effective from the date the TWSS was introduced.All that is in the system and is mainly with the Department of Employment Affairs and Social Protection. That has yet to be teased out and I hope it will deal with it properly.
The scheme was designed to maintain people's net pay. Some employers looked at the net pay, whatever particular payment they were given under TWSS, and may have incorrectly deducted some moneys from the net payment such as trade union dues or payments to a credit union thus reducing the payment received. The employers were not entitled to do so. Some employers have made mistakes and they will have to correct same. It is important that the employees are on top of the situation concerning non-statutory deductions.
The Senator asked for a full review. There might be a reason a particular company in financial difficulty may choose not to pay the maximum payment during the period and I speculate as to the reason. First, if a company maintains pay at a particular level and then must deal with redundancy payments for those employees down the road, perhaps it would use this as a mechanism not to have their average net pay in the run up to a period of anticipated change or redundancy that could happen to reduce the redundancy payment that employer might have to pay down the road. I would call that financial engineering.
I am not talking about Aer Lingus but I hope the people there are listening closely. That could be a situation.
The Senator also mentioned other payments. Some employers might have had their own reasons in terms of staffing. Those issues will, more appropriately, be dealt with by the Workplace Relations Commission and not by Revenue. I stress that the Revenue Commissioners will not be involved in these types of issues but whatever the adjudications are they will implement them financially from the Revenue point of view.
The Senator requested that a Revenue's compliance report into Aer Lingus be published. She knows that we cannot publish details. However, the points raised in this debate need to be examined by Revenue, the Department of Employment Affairs and Social Protection, and the Department of Business, Enterprise and Innovation because this could affect redundancy payments down the road. I ask all Departments to take close note of the points made here today.