Budget 2021: key takeaways for employers

No cliff edge to Employment Wage Subsidy Scheme
Parents' leave and benefit extended to five weeks from April 2021
Waiting period for illness benefit reduced to three days from end of February 2021
State pension age remains at 66
No broad changes to income tax credits or bands
Christmas Bonus for those receiving PUP for four months or more
Importance that part remote working has played in country's response to pandemic

The COVID-19 pandemic and the threat of a no-deal Brexit are the overriding themes underpinning the government's budget for 2021. According to Tánaiste Leo Varadkar, the government has set aside €5.5 billion in contingency funds due to the "unbelievable uncertainty" facing the country. This article highlights the key points from the budget that employers should note.

No cliff edge to Employment Wage Subsidy Scheme

The Employment Wage Subsidy Scheme, which provides a flat-rate subsidy to employers in sectors affected by COVID-19 whose turnover has fallen by 30%, will continue until April 2021 and a new form of the scheme will take its place until the end of 2021.

Parents' leave and benefit extended to five weeks from April 2021

Introduced in 2019, Parent's Leave currently entitles each eligible parent to two weeks' paid leave during the first year of a child's life or, in the case of adopted parents, during the first year of placement. The government has confirmed that the extension to five weeks' paid leave will apply retrospectively to parents of children born or adopted from November 2019.

Waiting period for illness benefit reduced to three days from end of February 2021

The current waiting period to apply for illness benefit is six days. Illness benefit is paid at a rate €203 per week before tax for full-time pay-as-you-earn workers with a sufficient level of pay-related social insurance (PRSI) contributions. Employees certified as diagnosed with or suspected of having COVID-19 are entitled to apply for enhanced illness benefit of €350 per week. There is currently no waiting period to apply for enhanced illness benefit; however, this is expected to end by 1 April 2021. The Labour Party recently proposed a bill which would introduce a statutory right to paid sick leave (for further details please see "Proposed new rights to sick pay and parental leave pay").

State pension age remains at 66

The government had previously indicated that the state pension age would increase to 67 in 2021, with a further increase to 68 expected in 2028; however, the state pension age will remain at 66.

No broad changes to income tax credits or bands

There are no broad changes to income tax credits or bands. Instead, the ceiling of the second universal social charge (USC) rate band will be increased to ensure that the salary of full-time workers on minimum wage will remain outside the USC's top rate. In early October 2020 the government announced that the national minimum wage will increase by 10 cents to €10.20 per hour. The weekly threshold for the higher rate of employers' PRSI will also be increased to ensure that the lower rate applies to full-time minimum wage workers so that there is no incentive for employers to reduce working hours.

Christmas Bonus for those receiving PUP for four months or more

The Christmas Bonus is an extra payment for people on long-term social welfare and is paid at 100% of the relevant weekly social welfare payment. Pandemic unemployment payment (PUP) is due to continue until April 2021, but the higher rate of €350 per week, which was reduced to €300 in September 2020, will not be restored. Since the time of writing, the government has announced that the rate of the PUP will be restored to €350 for those who were earning in excess of €400 per week.

Importance that part remote working has played in country's response to pandemic

Minister for Finance Paschal Donohoe confirmed that an inter-departmental group has been set up to work on a strategy for remote working and remote service delivery and highlighted the tax reliefs currently available for employees working from home, which include the following:

• Up to €3.20 may be paid by employers towards employees' expenses of working from home without a benefit-in-kind arising.
• Where an employer makes no contribution, employees may claim a tax deduction for utility expenses such as heat and light. This will now also include broadband (Revenue guidance is expected).
• Claims may also be made by employees for other vouched expenses incurred "wholly, exclusively and necessarily" in the performance of their duties of employment.

For further information on this topic please contact Niamh Crotty at Lewis Silkin Ireland by telephone (+353 1566 9876) or email (niamh.crotty@lewissilkin.com). The Lewis Silkin Ireland website can be accessed at www.lewissilkin.com/en/ireland.