EWSS Employment Wage Subsidy Scheme
In the recent July Stimulus package the Government introduced the Employment Wage Subsidy Scheme (EWSS). This will replace the TWSS scheme which will cease on 31st August 2020.
Employers may not operate both schemes simultaneously for the same employee. Employers who are currently using the TWSS scheme must continue to do so until the end of August, at which point they can participate in the EWSS provided they meet the eligibility requirements.
However, Employers currently using TWSS may claim the EWSS for new hires from 1st July 2020. Employers who have not registered for TWSS, may use the EWSS from the 1st July 2020.
Employer Eligibility
Employers must prove their eligibility to Revenue by demonstrating:
- That their business has suffered major disruption as a result of COVID-19. The business has suffered at least a 30% drop in either turnover or orders for the period 1st July 2020 to the 31st December 2020, when compared to the reference period of 1st July 2019 to 31st December 2019
- The Employer must have an up to date Tax Clearance Certificate
- The Employer must register for the EWSS. This facility is now available on ROS.
- The Employer must review their eligibility at the end of each month and if employers no longer qualify, they must deregister for EWSS through ROS with effect from the following day (that being the 1st of the month) and cease claiming the subsidy.
- If an employer becomes aware prior to the end of the month that they will no longer meet the eligibility criteria (e.g. unexpected donation or grant received at the start of a month), they should deregister immediately and cease to claim subsidies.
- If circumstances change the following month and the employer is again eligible, they can reregister and claim from the date of reregistration. It is not possible to backdate the claim to include the period of deregistration as that correctly reflected the employer’s expectation at that time.
Employee Eligibility
Under EWSS eligible employees include individuals who are employed at any time by the business during the qualifying period of 1st July 2020 to 31st March 2021 and in receipt of gross wages between €151.50 and €1,462 per week. Originally, proprietary directors were excluded from the scheme, but the Government removed this restriction on the 31st of July last. Proprietary directors who keep ‘ordinary’ employees on the payroll will be eligible to the EWSS from the 1st September. Revenue will provide more guidance on this shortly. However, certain connected persons, as defined by Revenue, are ineligible unless they were on the payroll and got paid between 1st July 2019 and 30th June 2020.
Under EWSS, registered eligible Employers will receive a subsidy per eligible Employee, based on the amount of Gross Pay (as defined by Revenue under PAYE Modernisation) paid to an Employee and reported to Revenue on the Payroll Submission Request per pay period submitted to ROS. The amount of subsidy payable for a weekly payroll are as follows (monthly equivalent figures have yet to be confirmed) –
Gross Pay Subsidy
- Less than €151.50: €0.00 per week
- €151.50 to €202.99: €151.50 per week
- €203.00 to €1,462.00: €203.00 per week
- More than €1,462.00: €0.00 per week
The subsidies will be paid to the Employer once a month in arrears, after the return due date (14th of the following month).Under EWSS, payrolls return to normal pre-COVID calculations. All gross payments made to Employees are subject to Tax, USC, EE PRSI and ER PRSI in the normal way.
Employers currently using TWSS, must ensure that for all pay dates on or after the 1st September that the Employee’s primary PRSI class is set to the class applicable prior to COVID. No net addition Wage Subsidy amount should be made. Normal pay rules apply. For any Payroll Submission Request submitted to Revenue with a payment date on or after 1st September 2020 will be rejected by ROS, if J9 is reported as an Employee’s PRSI class and or a COVID Payment amount on the submission.
One point to bear in mind is that under EWSS, the Employer Rate of PRSI for eligible Employees is 0.05%. Revenue have yet to confirm how this will be implemented, but it is likely that the Employer will calculate Employer PRSI at the normal rate and Revenue will refund the difference between what was calculated at the normal rate by the Employer and the 0.05% that applies under EWSS. This may be refunded directly or the Employer monthly liability on their Statement of Account will be reduced by the value of the over calculated Employer PRSI.
To minimise abuse, safeguards will be included specifically to ensure employers are not laying off one employee to replace them with more than one employee earning a lower wage, thereby maximising subsidy entitlement, and manipulation of payroll including deferring, suspending, accruing, increasing or decreasing gross wage that would normally be payable.
To discuss how the full measures can benefit your business directly please contact us.
