The Minister for Finance has ruled out any clawback of Temporary Wage Subsidy Scheme (TWSS) supports from employers who subsequently lay off substantial numbers of staff.
Paschal Donohoe was responding to a Parliamentary Question from Labour's Spokesperson Employment and Social Protection Ged Nash, who asked whether he would consider a "clawback mechanism" for employers availing of the TWSS who subsequently lay off significant numbers of employees.
"Maintenance of the employment relationship for a specific period of time is not one of the criteria for eligibility for the TWSS. I have no plans to change that position," the Minister said.
In his response, Mr Donohoe noted that the TWSS, which is due to expire in August, is an emergency measure to deal with the impact of the Covid-19 pandemic on the economy.
It involves the Government providing a sum to employers to cover a portion of their wage bill where the business in question has been "negatively impacted" by the Covid-19 restrictions.
The subsidy paid to the employer is based on the employees who were on their payroll on 29 February, the net salary of such workers during January and February, and "the extent to which the employer remains able to continue to discharge their legal obligation to pay their employees salaries".
The aim of the scheme is to maintain the net pay of as many employees as possible while preserving the employer-employee link and helping the firm to remain viable.
In a separate Parliamentary Question, Mr Nash referred the Minister to an IBEC survey stating over 40% of companies indicated that they intended to continue to pay bonuses in 2020.
He asked the minister whether companies availing of state aid including the TWSS should postpone the payment of bonuses.
In his response, the Minister noted that "bonuses, commissions and other once off payments" are taken into account when calculating the average net weekly pay of the employee during January and February which is the basis for the applicable wage subsidy.
The Minister also pointed out that "no wage subsidy amount is payable for any employees with an average net weekly pay which exceeds €960 per week".
"Moreover, for the duration of the scheme, any payment of wages by an employer to an employee at a level higher than the average net weekly pay, including payment of bonuses, could result in payments exceeding various threshold limits set out in the legislation and in the determinations of rates of subsidy amount made by me as Minister for Finance," he said.
Mr Donohoe said that this would lead to a "tapering" of the subsidy amount payable, resulting in certain circumstances in no wage subsidy at all being due.
However, the Minister also indicated that the TWSS has "no role" in relation to the employer/employee relationship in so far as the terms, conditions and entitlemebnts of the employment are concerned.
Mr Donohoe told Mr Nash: "... the question of an individual's entitlements in an employment context, and the question of what wages, including bonuses, an employer may or may not be in a position to pay such an employee in the light of the impact of the Covid-19 pandemic on the employer's business, are matters that are outside the remit of the TWSS."
Deputy Ged Nash called for the TWSS to be converted into an enhanced short-time work scheme to support specific sectors.
He noted that at the outset of the pandemic emergency, he had called for the introduction of a wage subsidy scheme as an essential support for beleaguered businesses and to allow for staff to be retained.
He expressed the view that the subsidy would have to continue for some time yet - and argued for it to be "...carefully redesigned over time into a new, enhanced short-time work scheme to support specific sectors as they gradually reopen".
Mr Nash said that while everyone accepted that businesses needed certainty around costs and would continue to require state support, the same kind of certainty should be extended to employees who continue to work for firms benefiting from the TWSS.
"Tied to the ongoing State cash support to get businesses back on their feed should be some basic minimum conditions around the continuation of employment but unfortunately the Minister for Finance isn't persuaded of the merits of the argument," he said.
The latest figures from the Revenue Commissioners also reveal the deterioration in wages and Government tax take caused by the coronavirus.
In January, before the pandemic struck, 1.9 million employees earned wages totalling €6.187 billion or an average of €3,249 per month.
By May, the number of employees fell to 1.57 million. Their total earnings had fallen to €4.387 million or an average of €2,787 per month.
The income tax take from those workers fell from €1.077 billion in January to just €755 million last month.
USC also plummeted from €211 million to €150 million over the same period.
Employee PRSI fell from €220 million to €151 million, while employer PRSI dropped from €595 million to €389 million.
However, the deterioration is even more dramatic when it comes to employees currently in TWSS-subsidised employment.
In January, 520,000 such workers earned total gross pay of €1.483 billion, or an average gross pay of €2,847.
However, by May, 500,000 workers earned gross pay of just €464 million, or an average gross pay of €930.
Again, that drop in wages had major implications for the exchequer.
Income tax paid by TWSS-subsidised employees plummeted from €189 million in January to a deficit of €23 million last month.
USC in January came to €38 million, but that number fell to just €1 million in May.
The employee PRSI take dropped from €53 milllion to €6 million, while employer PRSI collapsed from €143 million to €19 million.
31,900 who had been in TWSS-subsidised employment lost their jobs and are now claiming the Pandemic Unemployment Payment.
However, 55,500 have closed their PUP claims and have moved back to TWSS subsidised employment.
The figures also reveal that a further 50,100 have closed PUP claims to take non-TWSS employment.
