Covid wage scheme makes no sense

[Jaykay12]

I run a small business with 3 employees.
It appears to me, the employees would be better off financially if I laid them off. With layoff they would get €350 per week. With the 70% of net weekly pay, as outlined by the revenue, all employees get less than €350 with the 70% scheme.
Also, when the lockdown ends, I will have to reduce their days to 3 per week. On 3 days per week, they will earn less than €350, so why would they want to work if they can get €350 with a full lay off?
The intention of the scheme was to prevent layoffs but the way it works for me is to encourage it.
Am I missing something here or what?

 

[catnonie]

Yes I agree with you. I too have a similar problem I want to make it possible for people to work from home and then avail of the 70% to help me pay them but cannot find guidance if this is allowed and additionally those staff would probably settle for 350 rather than do any work? Am I missing something?

 

[Purple]

Yes I agree with you. I too have a similar problem I want to make it possible for people to work from home and then avail of the 70% to help me pay them but cannot find guidance if this is allowed and additionally those staff would probably settle for 350 rather than do any work? Am I missing something?

If they are working from home then they are still working for you and should get nothing other than what you are paying them.

 

[catnonie]

If they are working from home then they are still working for you and should get nothing other than what you are paying them.

Thanks for reply. So we wouldn't be eligible to claim the 70%? I cannot find guidance on this?

 

[Purple]

Thanks for reply. So we wouldn't be eligible to claim the 70%? I cannot find guidance on this?

If they are still working for you full time then you have to pay them.

 

[catnonie]

If an employee normally does admin work and can do some catch up now from home even though we have no income coming in then can we claim the 70% for them is what I mean? Thanks

 

[Wahaay]

More importantly than this if a company has some cash reserves and they apply for this scheme they are liable to repay the funds they receive,plus interest and penalties at any time for up to six years.
A company has to demonstrate it is unable to pay its staff.
If Revenue discover in a subsequent audit that a company has cash reserves it will be stung badly.
The government seriously expects SMEs to drain whatever savings they have for an indefinite period without any income in order to keep people off the Live Register.
My accountant is advising all his client to treat this scheme with extreme caution.
Here's on take on it which also explains more.

Richard Grogan: Employers should not use coronavirus wage subsidy scheme

Employment law solicitor Richard Grogan of Richard Grogan & Associates argues that Irish employers should not take advantage of the new temporary wage subsidy scheme introduced in response to the coronavirus pandemic. The Emergency Measures in the Public Interest (Covid-19) Bill 2020 was in

www.irishlegal.com

 

[Nutso]

Our accountant has also said this. The company I work for has decided to lay off staff and have them apply for the pandemic unemployment payment themselves. It is very unfair that small companies that have been prudent and have working capital and not bank loans are expected to fund payments to employees while they have no income stream themselves. If there is any chance of the company continuing after all this they will need those cash reserves to keep going.

 

[Wahaay]

[broken link removed]

This is the latest and as usual unhelpful guide from Revenue.
Towards the end it says the government still expects employers to pay a significant portion of the employee's wages.
What does that even mean ?
Laughingly Revenue is assuring employers to trust them.
Yeah,right.
I fear this is con-trick more than cock-up.

 

[catnonie]

2.6. Must all my employees be affected to avail of the Temporary Wages Subsidy Scheme ? Eligible employers can participate in the scheme in respect of any eligible employees on their payroll, including those on reduced hours, rehired staff who were temporarily laid off or staff temporarily laid off but retained on the payroll

This is from Revenue! So why does it say reduced hours - what is the context of this? That means they can still be working reduced hours and 70% can be claimed back no? Thank you for your help here!

 

[Mrs Vimes]

This came from The Law Society (emphasis is mine):

Many legal firm employers will be anxious about the second condition listed above – a 25% reduction in turnover. The alternative measure, a 25% reduction in customer orders coming in, is likely to be more relevant in the legal profession. Employers should be able to evidence this by the number of new files opened and/or a drop in hours recorded on time sheet records.


There was concern about the fourth condition listed above – inability to pay. Revenue say that an employer that has been hit by a significant decline in business, but has strong cash reserves that are not required to fund debt, will still qualify for the scheme. However, the Government would expect the employer to continue to pay a significant proportion of the employees’ wages

 

[Wahaay]

This came from The Law Society (emphasis is mine):

Many legal firm employers will be anxious about the second condition listed above – a 25% reduction in turnover. The alternative measure, a 25% reduction in customer orders coming in, is likely to be more relevant in the legal profession. Employers should be able to evidence this by the number of new files opened and/or a drop in hours recorded on time sheet records.


There was concern about the fourth condition listed above – inability to pay. Revenue say that an employer that has been hit by a significant decline in business, but has strong cash reserves that are not required to fund debt, will still qualify for the scheme. However, the Government would expect the employer to continue to pay a significant proportion of the employees’ wages

Indeed.
But how much is a " significant proportion " or how big are the " strong cash reserves "
Unless this is clearly stated in law then any company signing up to this scheme opens themselves up to an audit, repayment with interest and fines by Revenue diktat.
And anyone who thinks Revenue will look kindly on any business in the future has clearly never been at the receiving end of an audit.
As much as you care about the well-being of your employees avoid this scheme completely - it could prove extremely painful for you in the long term.