“Can an employer participate where the employer has strong cash reserves?

“Can an employer participate where the employer has strong cash reserves?

The Act states that employers can participate only where they would otherwise not be in a position to discharge the wages of employees in full.  Whilst this was initially taken to mean that companies who had cash reserves following prudent working capital practices or who had cash built up for investment could not participate, recent guidance has reduced these concerns.

The Minister for Finance has confirmed on 30 March that there is no requirement to use cash retained for investment for these purposes and companies holding cash for investment are not precluded from the Scheme.  The Minister stated that he wishes to ensure that companies are in a strong financial position to proceed with intended investment following the emergency.

Additionally, on 1 April, the Chairman of the Revenue Commissioners stated that companies with ‘normal reserves’ of cash can participate in the Scheme (although the stronger the cash reserves, the greater the obligation of employers to top up the subsidy when paying wages to staff).  What is normal will have to be assessed in this regard but it would appear prudent for employers to assess working capital requirements at this point based on the effects of the emergency continuing to impact business for the next 6 to 9 months at least. In this regard, the Scheme provides a subsidy for only 3 months of this period so ‘normal reserves’ may amount to a much higher figure than that which would be required on an historic working capital basis.”

HR Duo,

Unit 8D, Dunshaughlin Business Park,

Dunshaughlin

Co Meath, A85 EE98