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On 15 April 2020, the Irish government announced updates to the Temporary Covid-19 Wage Subsidy Scheme. Most of the changes will take effect from 4 May 2020 (at the earliest) during Phase II of the scheme.

The exact date of commencement of Phase II will depend upon several factors including the speed at which payroll software can be updated to accommodate the changes needed.  Some  changes in respect of Phase I will take effect from 16 April 2020. (updated Phase I guidance can be found here).

Phase I - Revised rates of subsidy from 16 April 2020 for certain employees

The current subsidy system has been amended to include employees whose pre-Covid salary was greater than €960 per week but has now fallen below €960 (this broadly equates to an amount of €76,000 per annum assuming normal annual allowances). The subsidy available is subject to the tiered arrangements applicable for Phase II and tapering will apply to ensure the actual net pay received does not exceed €960 per week. 

In these cases, where the employee’s earnings have been reduced by:

  • More than 20%, a subsidy of up to €205 would be payable;
  • More than 60%, a subsidy of up to €350 would be payable.

This information is now available on Revenue’s website with further details under 'Operating the scheme from 26 March 2020'. Illustrative examples have been requested from Revenue to provide clarity on how these changes will work in practice. 

Phase II - Revised rates of subsidy from 4 May 2020

The following rates are expected to apply to payrolls with a payment date on or after 4 May 2020. An employee’s average net weekly pay (“ANWP”) will continue to be based upon on the January and February payroll submissions.

Employees previously earning up to €586 net per week

An enhanced subsidy has been introduced for those earnings under €412 net per week and between €500 and €586 net per week on average.

Average net weekly pay


Up to €412

85% of AWNP, up to a max of €350

Between €412 to €500

Flat rate of €350

Between €500 to €586

70% of AWNP, up to a max of €410

Employees previously earning in excess of €586 net per week

For employees whose previous ANWP is greater than €586 per week but not more than €960 per week, the temporary wage subsidy shall not exceed €350 per week, and shall be calculated by reference to the amount of any additional payments made by the employer and its effect on the average net weekly pay as follows:

Gross top up payment

Subsidy available

Up to 60% of ANWP


More than 60% but less than 80% of ANWP


More than 80% of ANWP


Tapering of the subsidy will apply to all cases where the top up in gross pay paid by the employer plus the subsidy exceeds the previous ANWP. The one exception to this is where the sum of the employer top up and available subsidy does not exceed €350.

Additional Phase I Irish Revenue Guidance

Version 6 of Revenue’s FAQs issued on April 16th and is available through this link. Some of the main points of note are as follows:

  1. Confirmation that for PAYE purposes, the subsidy is not part of pensionable earnings but will remain part of the employee’s net relevant earnings for pension purposes. So, while an employee cannot make a pension contribution via the PAYE system they are still free to opt to contribute outside of the payroll system and claim tax relief via the 2020 personal tax return.
  2. Confirmation that pension scheme approval will not be withdrawn where an employer suspends pension contributions during the scheme period. In terms of any requirement to contribute specific percentages to the pension scheme, Revenue advise that any contractual arrangements in place between employers, employees and pension scheme advisors is not a matter for Revenue to consider.
  3. Confirmation that when calculating the ANWP the number of insurable weeks to be used should be those reported in the January and February payroll submissions, up to a maximum of 9 insurable weeks. A small number of exceptions are set out in Section 4.3 of the FAQ document.

Finally, Revenue have also advised that any employee who wishes to obtain an amended 2020 tax credit certificate on a Week 1/Month 1 basis should contact Revenue via MyEnquiries. This may be of interest to employees who do not wish to avail of refunds of tax paid for the year to date during the subsidy period, allowing them to minimise potential tax liabilities on the subsidy and other income as part of the end of year review.

Get in touch

If you would like to discuss further any of the above matters, please do not hesitate to get in touch with any member of our KPMG team listed or your usual KPMG contact. 

Further information