knowledge 28 August 2020 |

COVID-19: Employment Wage Subsidy Scheme

Eligible employers claiming the TWSS in respect of their eligible employees may continue to do so in respect of these employees for pay dates up to 31 August 2020.  For pay dates from 1 September 2020, EWSS may be claimed in respect of these employees provided the employer meets the EWSS eligibility criteria.  There is a separate registration process which must be followed for EWSS as the eligibility criteria differs from the eligibility criteria for TWSS.  Registration for the EWSS is available now on Revenue Online Service (“ROS”) under the ‘Manage Tax Registrations’ heading.

The terms of the EWSS are set out in the Financial Provisions (COVID-19) (No.2) Act 2020 (Act No. 8 of 2020), which was signed into law on 1 August 2020 and inserted section 28B into the Emergency Measures in the Public Interest (Covid-19) Act 2020.  The Minister for Finance will continue to monitor the situation and may amend the terms of the scheme, in particular the end date, rate of subsidy payable and turnover test to determine employer eligibility.

Employer Eligibility

In order to qualify for the EWSS, the employer must possess a tax clearance certificate and must maintain tax clearance for the entire period of the scheme.  This requirement is new to the EWSS and was not required by the TWSS.  If an employer does not currently hold a tax clearance certificate, an application can be made online through ROS under the ‘Manage Tax Clearance’ heading.

In addition to the tax clearance requirements, an employer must be able to show that their business will experience a 30% reduction in turnover or orders between 1 July 2020 and 31 December 2020 and that this disruption is caused by COVID-19.

The reduction in turnover or orders is relative to the following periods:

Period Business Commenced Trading	Relevant Period
Prior to July 2019	July to 31 December 2019
Between 1 July and 1 November 2019	Date of commencement to 31 December 2019
After 1 November 2019	Projected turnover/orders for 1 July 2020 to 31 December 2020

Eligible Employees

Eligible employees are individuals who are in receipt of gross wages of between €151.50 and €1,462 per week from an eligible employer during the “eligibility period” of the scheme (1 July 2020 – 31 March 2021).  The EWSS extends the definition of eligible employee to now include an individual who is on the payroll of the employer at any time in the “qualifying period” i.e. at any time between 1 July 2020 and 31 March 2021.  Under the TWSS employees were only eligible if they were on the payroll on 29 February 2020.

An employee who is eligible under the existing TWSS provisions will also be considered eligible under the EWSS.  An EWSS claim can commence for an employee when TWSS ceases to be claimed. The latest date for claiming TWSS is August 31 2020.

Employees connected with the employer are excluded from the scheme unless such connected person received pay from the employer between 1 July 2019 and 30 June 2020. The majority of proprietary directors of an employer are also excluded from the scheme.  It has however been agreed that the EWSS can be claimed in respect of certain proprietary directors of SMEs.  Revenue is engaging with the Department of Finance on this point and further guidance will be released in due course.

Registration for the EWSS

The EWSS will be open to employers who file their payroll submissions through ROS.  An employer who wishes to avail of the EWSS may register for the scheme through the ‘Manage Tax Registrations’ tab on their ROS account.  As part of the registration process the employer will be required to declare that the eligibility criteria are met.  Applications for registration will only be processed where the employer is registered for PAYE/PRSI as an employer, has a bank account linked to that registration and has tax clearance.  The EWSS will be administered on a ‘self-assessment’ basis and Revenue will not seek proof of eligibility at registration stage.  Proof will be sought by Revenue at a later stage based on risk criteria.

Where an employer files an EWSS payment submission before first registering for the scheme it will be rejected in full.

EWSS eligible employers can backdate a claim to 1 July 2020 for EWSS payments in respect of new entities, seasonal employees and new hires who were not eligible under the TWSS.  A template form will be available on ROS by the end of August 2020 which employers must submit by 5 September 2020 in order to avail of this ‘sweepback’ scheme.  Backdated submissions will not be processed after 14 September 2020 in respect of July/August 2020. The subsidy will be paid into the designated bank account as soon as practicable after this date.

Rate of Subsidy

The subsidy will be payable to eligible employers on a flat-rate basis per eligible employee as follows:

Employee Gross Weekly Wage	Subsidy Payable
Less than €151.50	Nil
From €151.50 to €202.99	€151.50
More than €1,462	Nil

Payment of Subsidy

Under the EWSS, the employer should continue to pay employees their normal wages.  The subsidy will be paid by Revenue directly to the employer’s designated bank account following submission of their payroll return to Revenue for the relevant pay period.  Revenue will conduct a month end review based on the payroll submitted by the employer – a statement will be posted to ROS and the subsidy payment will be made to the employer in the month following payment of wages.

The employer must include ‘EWSS’ as the payment type in the ‘Other Payments’ section on the payroll submission and input the digit zero or one cent (depending on the capability of the payroll software being utilised) as the quantum of the corresponding other payment made.  The employer should not include the EWSS ‘Other Payment’ details on the payslip provided to employees.

Gross payments made to employees will be fully liable to PAYE, USC and PRSI in the normal way.  This is a change from the TWSS and ensures employees will not continue to accrue tax liability which will become owing at year end.

While employee PRSI will apply at normal rates, employer PRSI will apply at a reduced rate of 0.5%.  As employer PRSI will have been returned as part of the payroll submission at a higher rate, Revenue will undertake an adjustment by calculating a PRSI credit due to the employer by using the PRSI scheme rate of 0.5% and subtracting this from employer PRSI due as reported in the submission.  Overnight on the return due date of the 14th of the following month, Revenue will post the PRSI ‘credit ’due for that month to the employer’s monthly payroll return to reduce the overall payroll taxes balance due.  This reduced liability is what becomes due and payable for the relevant month.  To avoid delay in posting employer PRSI credit, submissions need to be made by the return due date of the relevant month.

Employer’s Requirement for Continuous Review of Eligibility

The EWSS will be administered by Revenue on a self-assessment basis.  Employers are required to undertake a review on the last day of every month from August 2020 to February 2021 to ensure they continue to meet the above eligibility criteria.  If employers no longer qualify, they must deregister for EWSS through ROS and cease claiming the subsidy.

Subsidies which were correctly claimed in accordance with the terms and conditions of the EWSS prior to deregistration will not be repayable.

If an employer’s circumstances change following deregistration and they subsequently become eligible they can reregister and claim from the date of reregistration.  The claim cannot be backdated to include the period of deregistration.

Publication

As with the TWSS, the names and addresses of employers who receive a EWSS subsidy payment will be published on revenue.ie.