Employment Wage Subsidy Scheme (EWSS)

On 23 July 2020, the Government announced the July Jobs Stimulus 2020, which provided for several measures to boost the economy and get people back to work. Legislation underpinning the tax measures announced in the July Jobs Stimulus, the Financial Provisions (Covid-19) (No. 2) Act 2020 was signed into law on 1 August 2020 and it inserts section 28B into the Emergency Measures in the Public Interest (Covid-19) Act 2020. This provided for the introduction of the Employment Wage Subsidy Scheme (EWSS) on 1 September 2020, which replaced the Temporary Wage Subsidy Scheme (TWSS), and will run until 31 March 2021. The scheme provides for a flat-rate subsidy to qualifying employers based on the numbers of eligible employees on the employer’s payroll. The EWSS is based on an employee’s gross weekly wage, including notional pay, before deductions, and excluding non-taxable benefits.

Employers must possess valid tax clearance to enter the EWSS and continue to maintain tax clearance for the duration of the scheme. A reduced rate of employer’s PRSI of 0.5% is charged on wages paid which are eligible for the subsidy payment. Seasonal and new hires are eligible for the EWSS and claims can be backdated to 1 July 2020 (subject to limited exceptions). Employers can complete a ‘sweepback’ template providing details for each eligible employee.

On 31 July, the Minister for Finance, Paschal Donohoe T.D. announced that he had asked Revenue to reinstate proprietary directors to the EWSS from 1 September, where they meet the objective of the scheme of retaining ordinary employees on the payroll. The legislative amendments were included in Finance Bill 2020.

On Tuesday 20 October, the Government announced changes to the EWSS subsidy rates to reflect the move to a higher level of national restrictions and better support for businesses dealing with COVID-19 Level 5 restrictions. Broadly, the EWSS rates will be aligned with the rates of payment under the COVID-19 Pandemic Unemployment Payment (COVID-PUP), up to €350 per week up to 31 January 2021. Revenue also announced that they would be bringing forward the EWSS payment dates so employers would receive subsidy payments within days of their payroll submissions for November payroll and subsequent payroll submissions.

We will update members on developments and clarifications as they arise.

Irish Tax Institute Representations

To help members understand and implement the scheme, we held a complimentary webinar on 17 August 2020, during which Revenue provided an update on the key features and conditions of the EWSS.

In the days leading up to the webinar, the Institute sought further clarity from Revenue on the registration and tax clearance process to assist members, given the short timeframe and work pressures for agents to ensure eligible employers were informed about the requirements of the new scheme and could avail of the EWSS from 1 September.

Revenue confirmed during the webinar that the cash reserves of a company will not impact an employer’s eligibility for the EWSS. Revenue addressed this issue and other questions relating to eligibility and applying the “turnover test” in an uncertain environment in the Q&A.

The Institute also received several queries from members enquiring whether employers could avail of the EWSS where employees are placed on a reduced work week, due to COVID-19, and the employees claim Short-Time Work Support from the Department of Social Protection. Revenue confirmed that employee claims for this social welfare support will not impact on their employer’s eligibility for the EWSS. The gross pay made by the employer to the employee determines the subsidy amount to be paid to the employer.

The Institute also asked Revenue about plans to include proprietary directors in the EWSS. Revenue advised that they were engaging with the Department of Finance about the inclusion of certain proprietary directors in the EWSS.

The recording of the webinar is available here:

Watch the webinar – 17 August