Changes to the Wage Subsidy Scheme were announced on Wednesday.
Minister for Finance Pashcal Donohoe has announced changes to the Wage Subsidy Scheme that is currently aiding Irish companies in keeping staff on their payroll.
The scheme, available to businesses that can demonstrate they've suffered a fall in revenue of 25% or more as a result of the Covid crisis, originally paid up to 70% of an employee's salary or a weekly payment of €410 (whichever amount was lower).
On Wednesday, Minister Donohoe announced that the scheme would now carry the burden for 85% of the wages for low-earners on the scheme.
For those employees with previous average net pay up to €412 per week (equivalent to almost €24,400), the subsidy will be increased from 70% to 85% of their previous net weekly pay.
There are also changes for those earning between €24,400 and €31,000, as the subsidy will now increase to €350 per week for that pay bracket. No changes will apply to those earning between €31,000 and €38,000.
Effectively, more employees will now receive a subsidy of €350 per week, and those with previous net pay below €412 per week will receive a greater level of subsidy.
However, a tiered system has now been put in place for everyone on the scheme who is earning more than €38,000. For those whose pay has been cut to 60% or less, the government will provide a subsidy of €350 per week.
There is no longer any subsidy available to workers on salaries over €38,000 whose employers are still paying more than 80% of their salary.
An example given by the Department to help understand this change reads:
"If an employee was earning over €76,000 gross and has now been reduced to below €960 net pay a week, and their reduction is more than 20%, then a subsidy of up to €205 would be payable and if the reduction was more than 40%, a subsidy of up to €350 would be payable.
"To calculate the level of subsidy payable, current gross pay will be compared with previous average net weekly pay for January/February. This subsidy will be tapered so as to ensure that the total net income (employer contribution + wage subsidy) does not exceed €960 net per week."
Speaking about the updated measures, Paschal Donohoe said: "The Temporary Wage Subsidy Scheme was designed and introduced with great speed. This was done to ensure the greatest number of employees maintained the link with their employer during this difficult time.
"It stood to reason that there were anomalies that needed to be ironed out to ensure greater fairness and implementation of the scheme. The whole world is facing a time of unprecedented difficulty. Here in Ireland we are working hard to ensure the impact and fallout from what is happening is minimised for our people to the greatest extent possible."
These changes will apply to companies whose pay date is on or after 4 May.
