Government’s new Employment Wage Subsidy Scheme
A new Employment Wage Subsidy Scheme (EWSS) has been operating since September 1st, 2020, replacing the Temporary Wage Subsidy Scheme (TWSS), which ended on 31 August.
Under the EWSS, eligible employers will receive a flat rate subsidy payment from Revenue, and it will apply a reduced PRSI rate in respect of eligible employees. The EWSS is intended to be in place until 31 March 2021.
The new Scheme continues to address Government intentions of supporting employers experiencing reduced turnover or reduced orders due to the ongoing economic impact of the Covid-19 pandemic. Eligible employers who were claiming TWSS for eligible employees may continue to claim TWSS in respect of these employees for pay dates up to 31 August 2020. For pay dates from 1 September 2020, EWSS can be claimed for these employees provided the EWSS eligibility conditions are met.
A separate registration process needs to be followed for EWSS as different eligibility criteria apply. Revenue has published a helpful guide on the new scheme here - https://www.revenue.ie/en/corporate/communications/documents/ewss-guidelines.pdf.
The scheme is open to employers who file their payroll submissions electronically through Revenue Online Service (ROS). The scheme provides:
• A flat-rate subsidy to qualifying employers based on the numbers of paid and eligible employees on the employer’s payroll; and
• A reduced rate of employer PRSI of 0.5% on wages paid which are eligible for the subsidy payment.
The rate of weekly wage subsidy the employer will receive per paid eligible employee is as follows:
Gross weekly wage paid by employer————————-Subsidy
Less than €151.50———————————————-No subsidy payable
Between €151.50 and €202.99——————————€151.50
Between €203 and €1,462————————————-€203
More than €1,462————————————————-No subsidy payable
The scheme will be administered by Revenue on a “self-assessment” basis. Revenue will not be looking for proof of eligibility at the registration stage. Revenue has indicated that they will in the future, based on risk criteria, review eligibility. In that context, employers are asked to retain their evidence/basis for entering and remaining in the scheme. The subsidy will be paid directly into the employer’s designated bank account once a month in arrears, as soon as practicable after the return due date (14th of the following month).
It is also worth noting that it is the intention of the Minister for Finance to continue to monitor the economy and may amend the terms of the scheme, specifically the end date, the rate of subsidy payable and the turnover test to determine employer eligibility.
As with all such Revenue schemes, employers must possess up to date tax clearance to enter the EWSS and continue to maintain tax clearance for the duration of the scheme, in order to receive the applicable EWSS payments provided all other conditions are met. Employers must also be registered for PAYE/PRSI as an employer and have a bank account linked to that registration.
In addition to having tax clearance, an employer must also be able to demonstrate that:
- Their business is expected to experience a 30% reduction in turnover or orders between 1 July and 31 December 2020, looking at the period as a whole rather than on a per-month basis; and
- This disruption is caused by COVID-19
The 30% reduction in turnover or orders is relative to:
- the same period in 2019, where the business was in existence prior to 1 July 2019;
- business commenced trading between 1 July and 1 November 2019; or
- the date of commencement to 31 December 2019, where the business commenced trading between 1 July and 1 November 2019; or
- the projected turnover or orders for 1 July to 31 December 2020, where the business commenced trading after 1 November 2019.
- Employers must conduct a monthly review to ensure that they remain eligible for the scheme.
for 1 July to 31 December 2020, where the business commenced trading after 1 November 2019.
According to the Revenue guidelines, employers should include all sources of trade income when reviewing the potential drop in turnover, specifically including sales, donations, and state funding. It is also important to note that childcare businesses registered in accordance with section 58C of the 1991 Child Care Act do not need to meet a turnover test to participate in the EWSS. Advice from Revenue should be sought where a business requires clarity where turnover and customer orders test do not adequately reflect trading disruption by Covid-19.
Under the EWSS, the normal requirements to operate PAYE and PRSI will be restored. This includes the regular deduction and remittance of income tax, USC and PRSI at the normal rates. However, on receipt of payroll submissions, Revenue will apply a reduced rate of 0.5% employer PRSI in respect of eligible employees for whom a subsidy is payable.
Monthly employer PRSI liabilities will be revised accordingly by Revenue. Revenue will do this by calculating a PRSI ‘credit’ due to the employer and will post the credit due for that month to the employer’s monthly payroll return to reduce the overall payroll tax balance due. This reduced liability is what becomes due and payable for the relevant month.