Employment Wage Subsidy Scheme (EWSS)

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Employment Wage Subsidy Scheme (EWSS)

Read more about the background to the EWSS

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 inserted 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). The scheme provided 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.

Further enhancements to the EWSS were announced in Budget 2022 given the impact of the ongoing pandemic. It was confirmed that the EWSS would remain in place in a graduated form until 30 April 2022 (the scheme had been due to expire on 31 December 2021) and there would be no changes to the enhanced rates for October and November 2021. A two-rate structure applies to subsidy payments for the months of December 2021, January 2022 and February 2022, with a subsidy rate of €151.50 per contribution week where the qualifying employee’s gross pay is at least €151.50 but not more than €202.99 per week and a rate of €203 per week will apply where the weekly gross pay is at least €203 but does not exceed €1,462. A flat-rate subsidy of €100 will apply in March and April 2022. The reduced rate of Employers’ PRSI (of 0.5%) will cease on 28 February 2022 and the full rate of Employers’ PRSI will then apply for March and April.

The scheme closed to new employer entrants from 1 January 2022.

Additional public health restrictions were introduced for certain businesses in December 2021 and on 21 December 2021 the Minister for Finance announced a re-opening of the scheme for certain employers who would otherwise be ineligible.

The public health regulations imposed with effect from 20 December 2021 were removed on 22 January 2022 and a further extension to the EWSS was agreed by government at Cabinet meeting on 21 January 2022. Businesses that availed of the EWSS, that were directly impacted by the public health regulations imposed with effect from 20 December 2021, would continue to receive the enhanced rates of subsidy for the month of February and the graduated step-down in subsidy rates, as previously announced, was delayed by one month with such firms continuing to receive support under the scheme until 31 May 2022.

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

Irish Tax Institute Representations

To help members understand and implement the scheme when it was introduced, 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 2020.

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.

To help members with the changes to the eligibility criteria for EWSS from 1 January 2021, the Institute published a news item on our homepage on 17 December with details of the measure, including the relevant benchmark periods where a business was not in existence in the first six months of 2019.

Finance (Covid-19 and Miscellaneous Provisions) Act 2021 extended the EWSS to 31 December 2021 and changed the comparison periods for determining eligibility for EWSS for pay dates from 1 July 2021. The Act also introduced a new requirement for employers to submit a monthly Eligibility Review Form (ERF) on ROS, comprising the data employers use in the rolling review of their eligibility for EWSS at the end of each month. The Institute recorded an update with Revenue on the new eligibility criteria and on how to complete the new form on ROS on 22 July 2021. Following the announcement by Revenue of the extension to the deadline for submission of the initial ERF (for June 2021) from 30 July to 15 August 2021, the Institute published a news item on our homepage on 27 July 2021 to update members.

To help members with the changes to the EWSS comparison periods for determining eligibility for EWSS for pay dates from 1 July 2021 and the requirement to submit a monthly ERF, the Institute sought further clarifications on the new aspects of the ERF in our engagement with Revenue when recording the update on 22 July 2021, and in subsequent days. The Institute issued a bulletin to members on 30 July 2021 outlining the clarifications received from Revenue to assist members completing these important forms.

The Institute also created a dedicated webpage detailing the information required to compete the initial and subsequent ERFs, information on how to fill in an ERF and the due dates for the forms.

On 19 October 2021, Revenue advised the Institute that it would be deregistering employers from EWSS where those employers have not claimed EWSS in respect of pay dates after 30 June 2021. Read Revenue’s update.