Rose Conway-Walsh (Mayo, Sinn Fein)
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196. To ask the Minister for Finance if an employee enrolled on the wage subsidy scheme in 2020 who has continued to work full time throughout the pandemic will face a reduction in their income due to the calculation of the scheme as a percentage of an employee's previous net weekly earnings rather than gross weekly earnings; and if he will make a statement on the matter. [5505/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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It is assumed that the Deputy is referring to the Temporary Wage Subsidy Scheme (TWSS) that was in place from 26 March 2020 until 31 August 2020 to support firm viability and preserve the relationship between the employer and employee insofar as is possible by subsidising a portion of the employer wage bill in circumstances where the employer’s business has been negatively impacted by the restrictions that have had to be introduced to stop the spread of the COVID-19 virus.

Throughout the operation of the TWSS the employer was expected to make best efforts to maintain the employee’s net income for the duration of the scheme.

However, the question of an individual’s entitlements and rights in an employment context, the question of what wages an employer would be legally obliged to pay employees in respect of hours worked and the question of an employer’s capacity to pay wages to employees at pre-COVID levels in the light of the impact of the pandemic on the employer’s business, were matters between the employer and the relevant employees and were outside the remit of the TWSS.

An employer who received TWSS payments under the scheme was obliged to pass on any such payments to its employees. Revenue’s ongoing TWSS compliance programme is specifically examining that employers adhered to that requirement, as well as examining employer/employee eligibility for the TWSS.

In order to get much needed income supports into the hands of employees as quickly as possible, Revenue operated a transitional phase of the Temporary Wage Subsidy Scheme until 3 May 2020. This transitional phase of the TWSS provided a subsidy of 70% of the average net weekly pay up to a maximum of €410 in respect of eligible employees.

On 4 May 2020 Revenue moved to the operational phase of the TWSS, which included increased subsidy rates of up to 85%, subject to certain limits. During this phase of the scheme Revenue ensured that the subsidy refunded to employers was based on each individual employee’s Average Revenue Net Weekly Pay (ARNWP), which was derived from an employee’s average net earnings in January/February 2020.

I am advised by Revenue that during the operational phase of the TWSS, the calculation of the subsidy payments to employers in respect of its employees based on the average net earnings of each employee during January/February 2020 has optimised the payments to employers for the vast majority of its employees. However, Revenue publicly announced on 8 May 2020 that for a small number of employees who were higher income earners before the COVID 19 pandemic, because of the interaction between their gross and net earnings, an additional subsidy payment may be due.

Revenue is currently in the process of identifying these employees, with a view to calculating any additional subsidy payment that may be due and will offset this amount against any undercharges of income tax and USC arising on their untaxed TWSS payments. This exercise is being done as part of Revenue’s final reconciliation of the Temporary Wage Subsidy Scheme.

Reconciliation involves a comprehensive review by Revenue of the ‘subsidy payable’ amount for each employee payslip, based on the rules of the TWSS. The total ‘subsidy payable’ amounts will then be compared to the actual total amount paid to the employer under the scheme to identify any instances where the amounts reimbursed to employers may have been over or under paid. In order to complete the reconciliation process, employers must provide details of the wage subsidy they paid to their employees. To date, Revenue has already received ‘subsidy paid’ data in respect of 94% of the 6 million payslips that were covered under the TWSS and is actively engaged with those employers who have yet to provide these details. Once all of the required information is available from TWSS reconciliation, the matter of calculating any additional subsidy payments to employees who may have such an entitlement and recalculating the tax and USC liability can be finalised. This process is likely to take several weeks to complete.