Employment Wage Subsidy Scheme - What you need to know

A new Employment Wage Subsidy Scheme has been introduced, providing a flat-rate subsidy to qualifying employers based on the numbers of paid and eligible employees on the employer’s payroll.

Both the Temporary Wage Subsidy Scheme (TWSS) and Employment Wage Subsidy Scheme (EWSS) will run in parallel from 1 July 2020 until the TWSS ceases at the end of August 2020. The EWSS will replace the TWSS from 1st September 2020. It is expected to continue until 31 March 2021.

Non-TWSS employers, i.e. those who have not previously availed of TWSS, will only be eligible to apply for the EWSS. EWSS support will be backdated to 1 July for eligible employers who did not qualify for the TWSS.

Employers wishing to operate the scheme from July 1st (i.e. for employees not eligible for TWSS) should process the payroll for these employees in the normal manner and Revenue will review these cases at a later date and refund the subsidy due. Revenue plan to cater for this via myEnquiries, this will require employers to provide Revenue with the employee details etc. Payment should be made in September. 

Employers who have availed of the TWSS will still be able to rehire eligible employees and continue to operate the TWSS until 31 August 2020. Employees already on TWSS must remain on TWSS until the end of August. From 31 July, TWSS employers can claim for non-TWSS employees under the new EWSS, for example, new hires.

While the concepts behind the two schemes are similar, there are a number of differences between them.

Scheme Eligibility

The EWSS will require employers to reassess their eligibility for wage support. To be eligible for the EWSS, employers must be able to demonstrate that their turnover or customer orders have suffered at least a 30% reduction as a result of Covid-19 between 1st July and 31st December 2020, compared to the same period last year.

There is one exception to this - Registered childcare providers can avail of the EWSS without the requirement to meet the 30% reduction in turnover or customer orders.

Under the EWSS a subsidy will be available for new and seasonal employees, in addition to existing employees.

The EWSS is also open to newly commenced businesses. Where a business commenced after 1st November 2019, the eligibility criteria will be assessed against projected turnover or customer orders had there been no COVID-19 disruption.

Revenue have confirmed that the EWSS can be claimed in respect of proprietary directors, subject to certain conditions - click here to find out more about EWSS & proprietary directors.

Operating the Scheme

Under the EWSS, employers will no longer have to download CSV files. 

Eligible employers will be required to register for the EWSS via ROS, using Manage Tax Registrations (under Other Services) in the main ROS screen. Employers must hold up to date tax clearance to register for the scheme and receive the subsidy payments.

The date of registration cannot be back dated prior to the date of application and does not need to be back dated if a claim will be submitted in respect of payments in July & August. Therefore, it is imperative that registration is undertaken prior to the first pay date in respect of which EWSS is being claimed.

The EWSS will be administered by Revenue on a ‘self-assessment’ basis. Employers must review their eligibility status on the last day of every month to ensure they continue to meet the eligibility criteria. If they no longer qualify, they should de-register for EWSS with effect from the following day (that being the 1st of the month).

Subsidy Support

Under the EWSS employers will receive a flat-rate subsidy of up to €203 or €151.50 per employee, per week, depending on the employee’s gross weekly pay. A subsidy will not be available for employee’s whose gross weekly earnings are less than €151.50 or greater than €1,462. The gross pay includes notional pay and is before any deductions for pension, salary sacrifice etc.

There will be an indicator on the payroll submission to indicate that an employee is an eligible employee for EWSS. On receipt of an eligible payslip, Revenue will calculate the subsidy payable based on the gross pay, pay frequency and the insurable weeks.

EWSS is a subsidy paid to an employer, it will not show on a payslip or in myAccount. The subsidy will be paid to employers monthly after the return due date, which is the 14th of the following month. Any changes made to payroll submissions after the return due date will not be processed for subsidy payments.

Under the EWSS, employers will be required to pay employees in the normal manner i.e. calculating and deducting Income Tax, USC and employee PRSI through the payroll.
The normal requirement to operate PAYE on all payments will be re-established under the EWSS.

However, a 0.5% rate of employers PRSI will continue to apply for employments that are eligible for the subsidy. This will be achieved as follows:

• PRSI will be calculated as normal via payroll e.g. on PRSI class A1. 
• Revenue will calculate a PRSI credit by calculating the difference between the rate on the normal PRSI class and the 0.5%. 
• The credit will show on the Statement of Account to reduce the employer’s liability to Revenue. 

For more information on the TWSS and EWSS register for our free webinar which takes place on 3rd September 2020. We will be joined by Revenue to discuss what you need to know about both schemes.