On 23 July 2020, the Irish Government announced the introduction of a new Employment Wage Subsidy Scheme (“EWSS”). The EWSS will replace the Temporary Wage Subsidy Scheme (“TWSS”) from 1 September 2020 and is set to run until 31 March 2021.
Both the EWSS and TWSS have been running in parallel from 1 July and will continue to do so until the TWSS ceases on 31 August 2020. Eligible employers can avail of the EWSS for eligible new hires from 1 July 2020. From 31 July 2020, those employers who had not previously availed of the TWSS, are only eligible to apply for the new EWSS. Where an employee is currently registered under the existing TWSS, that employee must remain in the TWSS until the end of August and should not avail of EWSS.
One of the main practical considerations for employers to note is that the qualification criteria for the EWSS differs from the current qualification criteria under the TWSS.
Firstly, employers must possess a valid tax clearance to enter the EWSS and continue to maintain tax clearance for the duration of the Scheme.
Secondly, in order to qualify for the EWSS, a business must demonstrate that it will experience a 30% reduction in turnover or orders between 1 July and 31 December 2020 and that this disruption is due to COVID-19. This reduction in turnover or orders is calculated by reference to: (a) the same period in 2019 where the business existed before 1 July 2019; (b) the date of commencement to 31 December 2019; or (c) where a business commenced after 1 November 2019, the projected turnover or orders.
There is an exception provided in respect of registered childcare providers, with the EWSS being available without the requirement to meet the 30% reduction in turnover or customer orders test.
A separate registration process is required for EWSS as the eligibility criteria differs materially from the eligibility criteria for TWSS. As registration cannot be backdated, employers should proceed to register for EWSS as soon as possible if the eligibility criteria are met.
As is the case with the TWSS, the EWSS will be overseen by Revenue on a self-assessment basis. The Revenue has recently confirmed that in order to ensure that the scheme is operated as intended by the employer, Revenue will undertake an assurance check programme at a later stage. Further details on how this future assurance check program will operate will issue in due course from Revenue, so employers are advised to retain evidence and supporting documentation which demonstrate their assessment and declaration.
A new stipulation also obliges employers to undertake a review on the last day of every month to ascertain whether they continue to meet the criteria and must de-register the following day if they no longer qualify for the EWSS.
All employees who are on the payroll of the employer at any time in the “qualifying period” (i.e. between 1 July 2020 and 31 March 2021) will be eligible for inclusion on the EWSS. Therefore, the EWSS is open to seasonal workers and new hires.
The EWSS will provide a flat-rate subsidy to qualifying employers, based on the number of qualifying employees on the payroll, as follows:
|Employee Gross Weekly Wages||Subsidy Payable|
|Less than €151.50||€0.00|
|From €151.50 to €202.99||€151.50|
|More than €203 and less than €1,462||€203|
|More than €1,462||€0.00|
As is the case with the TWSS, the subsidy will be paid directly to the employer. The employer will pay the employee their normal wages and will then receive a subsidy from the Revenue in respect of each eligible employee following submission of each payroll return.
The EWSS will re-establish the normal requirement to operate PAYE on all payments. This includes the regular deduction and remittance of income tax, USC and employee PRSI. The fact that subsidy payments will now be subject to tax and USC in the normal way is a welcome development and should rectify the issues which are being caused by employees eligible under the TWSS continuing to accrue a tax liability which is to fall due at year-end. Employer PRSI will continue to apply at a reduced rate of 0.5%.
As is the case currently with the TWSS, the names and addresses of all employers who avail of the EWSS will be published on the Revenue Website.
Although the level of support will be reduced, many employers will welcome the extension of wage subsidy supports until 31 March 2021.
Employers currently availing of the TWSS and indeed those considering registering for EWSS are strongly advised to consider the new eligibility criteria to ensure that they meet same. Any assessment made in this regard should be appropriately documented. Employers should also bear in mind the express stipulation that they must undertake a review on the last day of every month to ascertain whether they still meet the criteria.
If you have any questions on COVID-19 financial supports or any other aspect of Irish employment law, please contact Aoife Bradley at firstname.lastname@example.org or Einde O’Donnell at email@example.com, or any member of the Employment, Pensions and Employee Benefits Group at LK Shields Solicitors LLP.
The content of this publication does not constitute legal or other professional advice and is not intended to be relied upon as such.
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