Are you an Irish employer that has seen a reduction in turnover or orders as a result of the Covid-19 crisis? Have you availed of the Temporary Wage Subsidy Scheme (TWSS)?
If so, it’s important you’re aware that the TWSS stopped on 31 August 2020 and was replaced by the Employment Wage Subsidy Scheme (EWSS). The new scheme was implemented from 1 September 2020 and is expected to run until December 2021.
On 23 July 2020, the Irish government announced the €7.4 billion Jobs Stimulus package that included information about this new scheme. Similar to TWSS, EWSS is designed to help employers pay their employees through their payroll system during the Covid-19 crisis.
The main difference between these two schemes is that the EWSS operates on a flat-rate basis.
In this blog, you’ll learn:
- What is the Employment Wage Subsidy Scheme (EWSS)?
- Eligibility criteria
- How to apply?
- Employee criteria
- Rates of the subsidy
If you have any questions about how this scheme affects your business, talk to your accountant or Payroll Team. Alternatively, contact our Client Services Team for more information about our Payroll services.
What is the Employment Wage Subsidy Scheme (EWSS)?
The EWSS is an economy-wide enterprise support measure to help employers pay their employees through their payroll system during the Covid-19 crisis.
It has two elements:
- Flat-rate subsidy. The scheme provides qualifying employers with a flat-rate subsidy based on the amount of paid and eligible employees on their payroll.
- Reduced rate of PRSI of 0.5%. A reduced rate of employers’ PRSI of 0.5% will be applied on eligible wages paid.
How will the flat-rate subsidy be paid?
The subsidy will be paid once a month in arrears. It is paid directly into the employer’s designated bank account.
It was announced in the July Stimulus package that the Government has legislated to allow for debt associated with the Covid-19 crisis to be deferred or ‘warehoused’. This specifically applied to the deferral of unpaid VAT and PAYE (Employers’) debts.
If you are unable to repay your debts, Revenue recommends that employers engage with these initiatives as soon as possible by contacting the Collector General’s Division to ensure they have all returns filed and payment arrangements in place.
If you have an accountant, inform them of your position and ask for advice and guidance about a Revenue phased payment arrangement.
- Have a tax clearance certificate and continue to maintain tax clearance for the duration of the scheme (more on this below).
- Experience a 30% decrease in turnover or orders (caused by Covid-19 disruption) between 1 July and 31 December 2020.
- To ensure employers continue to meet the above eligibility criteria a review must be carried out on the last day of every month.
What is tax clearance?
Revenue grants tax clearance if the business’ tax affairs are up to date.
Outstanding returns or liabilities will result in tax clearance being refused. Therefore, it’s important that all tax returns are filed and paid.
If you cannot pay your debts, you need to ensure a phased payment arrangement is established.
How to obtain your tax clearance certificate?
- Employers can check their current tax clearance status through Revenue’s Online System (ROS.ie).
- If an employer doesn’t hold tax clearance currently, they can make an application online. They can assess this application in real-time through the ROS e-Tax clearance service.
If you currently have an accountant, you can talk to them about your tax clearance certificate. You need to have all your tax affairs up to date before you can obtain tax clearance.
Talk to our Client Services Team if you would like to outsource your accountant and compliance obligations. We’re always happy to assist.
Eligible employers can register for the EWSS on ROS.ie or your Payroll Team can register the business.
The application cannot be backdated so it’s important that employers are registered prior to the first pay date in which EWSS is being claimed.
It’s also important to note that if an EWSS payment submission is filed without first being registered, it will be rejected.
When to register for EWSS?
Registration for the EWSS is open from the 18 August 2020 and the scheme will be implemented from 1 September 2020.
The EWSS will only be processed with the employer that is registered for PAYE/PRSI as an employer. They will need to have a bank account linked to that registration and have a tax clearance certificate.
If you’re unsure about your tax situation, contact your accountant or talk to our Client Services Team, we’re happy to help.
As part of the registration process, the employer will be required to agree to the following:
“I declare that I have read the eligibility criteria for the Employment Wage Subsidy Scheme and that the business qualifies for the scheme. I undertake that the business will abide by the terms and conditions of the scheme. I understand and accept that failure by the business to adhere to the terms of the scheme could result in the recoupment of monies together with interest, penalties and prosecution. I undertake that the business will retain all records relating to the scheme, including the basis of eligibility, for review by Revenue.”
What happens if you no longer qualify for the scheme?
As mentioned, employers need to review their stance at the end of each month to ensure they still meet the eligibility criteria.
If an employer becomes aware that they no longer qualify for the EWSS, they need to immediately deregister from the scheme and cease to claim subsidies.
It is possible that an employer deregisters and then needs to re-register. If this happens, it’s not possible to back-date the claim if the employer correctly reported their expectations at the time.
What about proprietary Directors?
The department has agreed that EWSS can be claimed in respect of certain proprietary Directors. However, guidance has not be provided yet.
What employees cannot be part of the scheme?
- Employees working in a business division or related group entity not expected to suffer a 30% reduction in turnover or orders.
- Employees hired other than as part of a business e.g. domestic employees like childminders, housekeepers, and gardeners
What about new entities, seasonal employees and new hires?
Eligible employees can backdate a claim for EWSS to 1 July 2020 in certain circumstances. For example if:
- Their employer was not eligible for TWSS.
- Their employer had employees who were not eligible for TWSS. This does not apply to employees whose net wages exceed that which allowed TWSS to be claimed in respect of them due to tapering.
If you’re unsure whether your business or employees are eligible for EWSS, talk to your accountant or Payroll Team. If you don’t have an accountant or Payroll Agent, talk to our Client Services Team about outsourcing your accounting and payroll obligations.
It’s important to note that if employees are paid monthly, they can also be included. However, quarterly/yearly/biyearly/other payroll submissions will not be processed.
Monthly payments will need to be calculated and reported accurately to Revenue on or before the employee is paid.
Speak to your Payroll Team if you have any questions about how this works or talk to our Client Services Team about our Payroll services if you need support.
The scheme will be administered by Revenue on a “self-assessment” basis and therefore, to ensure compliance, Revenue will undertake assurance checks in relation to the scheme.
Revenue states that “it is imperative all records relating to the operation of the scheme are retained specifically including those supporting the expectation that turnover or customer orders will reduce by the requisite 30%, together with details of the monthly reviews that must be undertaken”.
How to proceed?
The Employment Wage Subsidy Scheme (EWSS) will be implemented from 1 September 2020, but registrations are open from 18 August 2020.
The TWSS will stop on 31 August 2020 so it’s important that you register for the EWSS before 1 September. Remember, you cannot backdate the registration so make sure you apply as soon as required.
Registrations will only be processed with the employer is registered for PAYE/PRSI as an employer has a bank account linked to that registration and has a tax clearance certificate.
You can do the registration yourself via ROS.ie or contact your Payroll Team who can manage it for you. If you are thinking about outsourcing your payroll, talk to our Client Services Team about our payroll services. We’re always happy to assist.