The Government introduced the COVID Wage Supplement scheme with a basic wage coverage to help employers keep employees in employment affected by the COVID-19 pandemic.
How to calculate with COVID Wage Supplements in payroll
In Indigo, you will find a new pay item called COVID Wage Supplement with the code WAGESUPCOVID. This is a taxable pay item and no default amount is assigned to it.
Since the government is supplementing wages directly to the employer, you will need to insert two separate pay items in the calculation.
The first pay item is the new COVID Wage Supplement and it is used to substitute part of the employee’s basic wage with the supplement amount.
The second is another pre-tax pay item that will be used to deduct the amount from the salary which will be paid as the COVID Wage Supplement. The Adjustment pay item will be used in the following scenario. Any taxable pay item can be used.
Note that the Basic Pay in the following scenarios was not altered, since SSC contributions should still be deducted normally.
First add the COVID Wage Supplement pay item:
1. Open the calculation payroll period to which you want to apply this.
2. Select an employee who will receive the COVID Wage Supplement pay item.
3. Click on the Pay Items tab, and then click Insert (plus icon).
4. Select the COVID Wage Supplement pay item (code: WAGESUPCOVID) and enter the appropriate value. This amount should always be in positive, and should be the Gross amount of the supplement.
5. Click Save (check mark icon).
Next, make a deduction to compensate for the COVID Wage Supplement:
6a. For employees whose equivalent monthly basic salary is more or equal than the COVID Wage Supplement value, perform the following:
Click on Insert to enter a Negative Taxable Adjustment pay item (code: ADJUSTMENT)
Enter a negative amount to deduct the equivalent of the COVID Wage Supplement. (See the illustration below for an example.)
6b. For employees whose equivalent monthly basic salary is less than the COVID Wage Supplement value, perform the following:
Click on Insert to enter a Negative Taxable Adjustment pay item (code: ADJUSTMENT).
Enter a negative amount to deduct the same value of the basic salary. (See the illustration below for an example.)
7. Click Save (check mark icon).