Employment Wage Subsidy Scheme – Eligibility and Key Elements

The Employment Wage Subsidy Scheme has replaced the TWSS as of 1 September 2020. It is expected to continue until 31 March 2021. As an employer you must register for EWSS separately. It is necessary for employers who are currently claiming TWSS in respect of eligible employees to separately register for the EWSS as different eligibility conditions apply to both schemes.

In response to the requests from employers, new categories of workers will be allowed to enter the EWSS. These categories are seasonal workers and new hires and proprietary directors, subject to conditions.

EWSS is available to eligible employers to claim in respect of payment of wages to eligible employees.   Exceptions which will prevent employers from being able to claim EWSS are: newly hired connected parties (brothers, sisters, linear ancestors, linear descendants, aunts, uncles, nieces, nephews of an individual and their spouse) and employees employed otherwise than as part of a business (domestic employees such as childminders, housekeepers, gardeners, etc.)

To be eligible for the scheme employers must have a valid tax clearance certificate and the business must be expecting to experience a 30% reduction in turnover or customer orders between 1 July and 31 December 2020 looking at the period as whole rather than on a monthly basis and this disruption is caused by COVID-19. The comparison to prove the reduction in turnover or customer orders is performed relative to: the same period in 2019 where the business was in existence prior to 1 July 2019 (seasonal business), the date of commencement to 31 December 2019 or where a business commenced after 1 November 2019, the projected turnover or customer orders (if the company is a new business).

If a reduction in customer orders is being considered as the basis for eligibility for the scheme, the following are examples of how it will apply:

• In the case of a retail business, a pub, a fast-food outlet and similar type businesses:  at least a 30% reduction in the value of overall sales (cash, credit and orders, including on-line and telephone orders). 
• In the case of a businesses which operates largely by way of “bookings” such as a restaurant, hotel, B&B, hostel, camp site, caravan park: at least a 30% reduction in the value of bookings for the relevant period.
• Employers are required to undertake a review on the last day of every month to ensure they continue to meet the eligibility criteria. If they no longer qualify, they should deregister for EWSS with effect from the following day (first day of the following month).

During the scheme, a subsidy can be claimed in respect of eligible employees of an impacted business on the payroll. Employees are eligible if they are in receipt of weekly gross wages between €151.50 and €1,462 subject to some exceptions. The level of subsidy the employers will receive per paid employee (per week) will be based on gross weekly wage rather than net, as follows: less than €151.50 – NIL, from €151.50 to €202.99 – €151.50, more than €203, less than €1,462 – €203, more than €1,462 – NIL. The payments are now fully taxable but the employer’s PRSI rate for those on the EWSS will remain on the reduced rate of 0.5%. 

Some key elements are noted below:

• Registration: Registration will be through the e-registration system. Employers will have to make a self-declaration as part of this process. It is noted that the employer must register first and be confirmed as eligible by Revenue before submitting payroll for EWSS support.

• Evidence: Revenue will not be looking for proof of eligibility at the registration stage. Revenue expects that employers will retain evidence of, appropriate documentation, including copies of projections, to demonstrate continued eligibility over the specified period.  It is reasonably expected that the assumptions which underpin the projections will be reliable, will reflect the operating conditions of the business, and will remain materially unchanged.
• Payment: 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 (14^th of the following month).

Lead Times: The government subsidy will be paid up to 6 weeks in arrears, placing a new cash flow burden on businesses that employers need to plan for. The Revenue Commissioners acknowledged that the delay could be over five weeks for those paid weekly, but said it would be as little as 2 weeks for those paid monthly. They said the time frame for the payment of subsidies due under the EWSS is tied in with the time frame within which the relevant monthly employer PAYE return is due. Employers may need to do a revised cashflow projection to ensure they have sufficient cover. It is recommended that employers contact their financial advisor to assist them with the same. 

For more information on the EWSS please visit: https://www.revenue.ie/en/corporate/communications/stimulus/employment-wage-subsidy-scheme.aspx for further details.

If you are an organisation based in the Republic of Ireland and require further information or advice relating to HR, please do not hesitate to contact our office on (066)7102887.