Statute of Limitations call by Law Society

The support services team of the Law Society has produced a detailed briefing on the proposed operation of the Temporary Covid-19 Wage Subsidy Scheme.

This briefing provides legal firm employers with guidance on eligibility for the Temporary Covid-19 Wage Subsidy Scheme that has just been launched by the Irish Government. Rules are currently based on draft legislation and may be altered before becoming law.

This subsidy scheme only applies to employed personnel.

Self-employed people, such as sole practitioners and equity partners, need to apply for personal financial support to a separate scheme, the Covid -19 Pandemic Unemployment Payment.

Scheme

The self-employed scheme is operated by the Department of Employment Affairs and Social Protection.

Applications for the Temporary Covid-10 Wage Subsidy Scheme need to be made to the Office of the Revenue Commissioners.

The process will operate in a similar way to how self-assessment works in tax settlement. The employer applies and formally confirms that they are compliant with conditions.

There are substantial penalties if it turns out that the person is not compliant.

Eligibility

Employers will only be eligible for this initiative if they meet four conditions.

These conditions are:

• Employer continues to employ staff (or a proportion of them),
• Employer’s turnover from 14 March 2020 to 30 June 2020 will decrease by at least 25% – or customer orders coming into the business will reduce by, at least, this amount for the same period,
• The employer’s business experiences economic disruption as a result of the COVID-19 pandemic,
• The employer is in a situation of ‘Inability to pay wage payments and other outgoings fully’.

Anxious

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.

Payments

Phase 1 is a short, transitional phase that builds on the current emergency Employer Refund Scheme that has been operational since 15 March 2020, under which the employer gets a refund of €203 per week for each employee that it keeps in employment.

The Subsidy Scheme will increase the €203 refund to a maximum of €410 in respect of all employees for employers who operate the Subsidy Scheme, regardless of whether the employer makes an additional payment to the employee’s earnings or not.

In Phase 2, no later than 20 April, the operation of the scheme will ensure that the subsidy paid to employers will be based on each individual employee’s average net weekly pay, subject to the maximum weekly tax-free amounts.

The amount paid to employers will initially be €410 per person claimed for per week. However, the eventual subsidy will be less in most cases and payments from the start of April 2020 will be adjusted to correct the cumulative amount paid for each person.

The eventual subsidy, from April 2020 onwards, will be 70% of net income, capped at €410 per week for a person on up to €38,000 per annum.

For those earning more than €38,000 per annum the maximum subsidy will be €350 per week but it appears that this will gradually reduce for higher salaries based on some form of ‘sliding scale’ until it falls to nil at a salary of €76,000 (above which employees are not eligible for the scheme).

Important

Employments that are covered by this scheme will be treated for PRSI purposes as Class J9 for the duration of the scheme. These employees will pay no Employee’s PRSI on either the subsidy or any top-up amount. Employers’ PRSI will only apply to the top-up element and will be at a reduced rate of only 0.5%.

There are various anti-fraud stipulations covering who qualifies as an employee and the amount that can be paid in wages for the purposes of the Wage Subsidy Scheme.

Finally, the names of all employers who avail of the Scheme will be published by the Revenue Commissioners on their website.

Business Continuity Voucher

The new Business Continuity Voucher is now available. It is open to all sole traders and companies which employ up to 50 people.

The voucher is worth up to €2,500 in third party consultancy costs and can be used to develop short and long-term strategies to respond to Covid-19.

The initiative aims to enable business owners to make well-informed decisions around actions which are immediately necessary to protect businesses and staff.

Full information on the initiative and other supports is available on the Local Enterprise Office website.

Representations 

The possible closure of court offices may affect solicitors who are instructed to issue proceedings urgently to comply with the Statute of Limitations.

Law Society President Michele O’Boyle says this is a real issue for practitioners.

Emergency 

“We have been consistently working to protect the interests of solicitors and their clients on this particular issue during this emergency period,” she said.

The Courts Service reassured Law Society representatives that proceedings could continue to be sent in by post and/or DX while court offices remained open and a drop box will be available in every Provincial Office to avoid any unnecessary contact.

In the event that court offices were to close (and this can only be done by way of a court order), refer to the High Court judgment of Morris J in Poole v O’Sullivan of 23 October, 1992 ([1993] IR 484).

Comfort

This gives some comfort in circumstances where proceedings cannot be issued because the courts offices are closed.

“However, I recognise that an amendment to the Statute of Limitations is the only mechanism to provide complete legal certainty around this issue. The Society has made representations across the political spectrum to seek such a legislative amendment,” said Michele O’Boyle.

A proposed amendment to the Statute of Limitations, was put down by FF justice spokesman Jim O’Callaghan in terms that were supported by the Law Society.

While the proposed amendment was ruled out of order by the Ceann Comhairle in advance of debate on the Emergency Measures in the Public Interest (Covid-19) Bill 2020, the Law Society believe that the Minister for Justice, Charlie Flanagan, fully understands the issue and was well disposed to support this amendment being enacted.

Press for amendment

“While it is disappointing that the amendment has not been accepted in either of the pieces of emergency legislation enacted to date, we will continue to press for an amendment to the Statute of Limitations to ensure that the interests of solicitors and their clients can be fully protected throughout this emergency period,” Michele O’Boyle said.