July Jobs Stimulus

Employment Wage Subsidy Scheme (EWSS)

Important

Information on the template for employers to claim the EWSS subsidy for the July August Sweepback is set out below.

The Financial Provisions (Covid-19) (2) Act 2020 (Act No. 8 of 2020) was signed into law on Saturday 1 August 2020. It inserted section 28B into the Emergency Measures in the Public Interest (Covid-19) Act 2020. This provides for the introduction of the Employment Wage Subsidy Scheme (EWSS).

EWSS is an economy-wide enterprise support that focuses primarily on business eligibility. The scheme provides a flat-rate subsidy to qualifying employers based on the numbers of eligible employees on the employer’s payroll and gross pay to employees. 

The EWSS replaced the Temporary Wage Subsidy Scheme (TWSS) from 1 September 2020. It is expected to continue until 31 March 2021.

EWSS Key Features

  • 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 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. From 15 September, the completed templates can then be uploaded to ROS via a new facility in Employer Services.
  • Subsidy is based on an employee’s gross weekly wage, including notional pay, before deductions, and excluding non-taxable benefits.
  • Revenue will publish a list of employers who availed the EWSS at the end of January and April 2021.

Qualifying Criteria for Employers

Important:

Employers must ensure they have tax clearance from Revenue in order to be eligible for the scheme.

Employers can check their current tax clearance status through Revenue Online Service (ROS).

If employers do not currently hold tax clearance, an application can be made online and assessed in real time through the ROS e Tax Clearance service.

Additional Qualifying Criteria for Employers

To qualify for the scheme, as well as having tax clearance, employers must be able to demonstrate that:

  • their business will experience a 30% reduction in turnover or customer orders between 1 July and 31 December 2020
  • 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
  • the date of commencement to 31 December 2019
  •  or
  • where a business commenced after 1 November 2019, the projected turnover or customer orders.

Employers are required to undertake a review on the last day of every month (other than July 2020 and the final month of the scheme) to ensure they continue to meet the eligibility criteria. If employers no longer qualify, they must deregister for EWSS through ROS with effect from the following day (that being the first day of the month) and cease claiming the subsidy.

Childcare businesses registered in accordance with Section 58C of the Child Care Act 1991 are included in the scheme with no requirement to meet the turnover test mentioned above.

Revenue expects that employers will retain evidence of appropriate documentation including copies of projections to demonstrate continued eligibility over the specified period.

Eligible Employees

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 exceptions below).

Exceptions include:

Proprietary Directors

However, it has been agreed that EWSS can be claimed in respect of certain proprietary directors. This is in recognition of the key role played by certain proprietary directors in providing employment, especially in the SME sector.

EWSS can be claimed in respect of proprietary directors, subject to the following conditions:

  • the employer meets the eligibility criteria for the EWSS
  • the proprietary director is on the payroll of the eligible employer
  • and
  • the proprietary director has been paid wages which were reported to Revenue on the payroll of the eligible employer at any stage between 1 July 2019 and 30 June 2020.

Where a person is a proprietary director of two or more eligible companies, a claim for EWSS can only be submitted in respect of a single company.

Newly Hired Connected Parties who were not on the payroll and paid at any time between 1 July 2019 and 30 June 2020. Connected parties include brothers, sisters, linear ancestors, linear descendants, aunts, uncles, nieces, nephews of an individual and their spouse.

Employees employed otherwise than as part of a business. For example, domestic employees such as childminders, housekeepers, gardeners ond so on.

Operation of EWSS

The EWSS will be administered by Revenue on a 'self-assessment' basis.  In contrast to the TWSS, the EWSS will re-establish the normal requirement to operate PAYE on all payments. This includes the regular deduction and remittance of income tax, USC and employee PRSI.  For employers who claimed TWSS in respect of their employees, this includes reverting from PRSI class J9 to the normal PRSI class.

From 1 July:

  • TWSS employers can claim for non-TWSS employees (new hires) under the new EWSS.
  • Non-TWSS employers, who have not previously availed of TWSS, will only be eligible to apply for the EWSS.

Above mentioned employees will be dealt with as part of a ‘sweepback ’with payment made in September. See the recent press release 'Revenue update for claiming EWSS ‘sweepback’ payments in respect of July and August 2020' for further details.

July/August Sweepback

The EWSS replaced the Temporary Wage Subsidy Scheme (TWSS) which ended on 31 August 2020. As some employees were excluded from the TWSS, for example, newly hired employees or seasonal employees, eligible employers can back date a claim for EWSS to 1 July 2020 in respect of such eligible employees in certain limited circumstances as follows:

  • the employer was not eligible for TWSS
  • or
  • the employer had employees not eligible for TWSS.

A Sweepback CSV template has now been made available by Revenue. Employers can now download this file and populate it with the required information. On 15 September Revenue will release a facility on ROS where an Employer can upload this Sweepback CSV. All applications must be submitted by the employer or agent through Revenue Online Services (ROS) before 14 October.  Additional guidance on the operation of the July/August Sweepback has been published outlining how to apply the sweepback process.

Subsidy Support

For pay periods other than weekly, for example where there are 4 or 5 weeks in a monthly pay period, the gross pay is multiplied by 12 and divided by 52; otherwise the gross pay is divided by the number of insurable weeks reported on the payslip.

Registration for the Scheme

A separate registration process is required for EWSS as the eligibility criteria differs materially from the eligibility criteria for TWSS.

Employers or their authorised payroll agents can now register for EWSS through ROS. As part of the registration process, employers or their authorised agents will be required to make a declaration. Applications will only be processed if employers:

  • are registered for PAYE/PRSI
  • have a bank account linked to that registration
  • have tax clearance.

If an EWSS payment submission is filed without first registering for EWSS, it will be rejected in full. As registration cannot be backdated it is imperative that employers register for EWSS prior to the first pay date for which the EWSS is being claimed.

Employers should retain supporting evidence of their basis for entering and remaining in the scheme.These will be required for any future compliance and verification checks.

How to Claim EWSS for Qualifying Employees

To indicate that a subsidy is being requested for an eligible employee, employers:

  • should include ‘EWSS’ as the payment type in the ‘Other Payments’ section on the payroll submission
  • input €0.00 or €1.00 (depending on the capability of the payroll package) as the quantum of the corresponding 'Other Payment' made
  • should not include the EWSS ‘Other Payment’ details on the payslip they provide to the employee.

On receipt of an eligible EWSS payroll submission from a registered employer, Revenue will calculate the subsidy payable and process the payroll submitted, post a statement into the employer’s ROS inbox by the fifth day of the following month and a payment will then be made into the designated bank account as soon as practicable after the payroll return filing date (14th of the following month). If an employer does not have tax clearance on the return due date, the subsidy payment will not be processed. Once the Employer has obtained tax clearance, they will need to contact Revenue, via MyEnquiries selecting 'Employer’s PAYE' and then 'Employer’s PAYE General Enquiry' to request that the refund issue.

PRSI

A 0.5% rate of employer’s PRSI will continue to apply for wages that are eligible for the subsidy.

Employers are required to report and apply the full rates of employer and employee PRSI as normal. However, on receipt of payroll submissions, Revenue will apply a reduced rate of 0.5% employer’s PRSI in respect of eligible employees for whom a subsidy is payable. Monthly employer PRSI liabilities will be revised accordingly by Revenue.

Compliance checks

To ensure that the scheme is operated as intended by the employer, Revenue will undertake an assurance check programme at a later stage. Further details on how this future assurance check program will operate will issue in due course.

Publication

In line with international practice a list of employers availing of EWSS will be published in January 2021 and April 2021 to www.revenue.ie.

Further guidance

Next: Enhanced Help to Buy (HTB) scheme