The Employment Wage Subsidy Scheme (EWSS) – announced as part of the July Stimulus package – replaces the Temporary Wage Subsidy Scheme from Tuesday, September 1st. The scheme provides a flat-rate subsidy to qualifying employers based on the numbers of paid and eligible employees on the employer’s payroll. The EWSS is expected to continue until 31 March 2021.
Application and further information via revenue.ie.
We are getting lots of questions from clients regarding eligibility and conditions of the scheme. We have put together a podcast with Jamie O’Hanlon answering frequently asked questions. The podcast is available to listen to via the Soundcloud link below.
Transcript of the Q&A
Question and answer session with Jamie O’Hanlon, Managing Director, Avid Partners 28/08/2020.
A: Generally, we are telling clients to register for the scheme, even though you may not consider yourself to be eligible at the current time, as the scheme allows you to opt in to avail of the scheme and allows you to opt out at a later stage if you feel you are no longer eligible. However, you can’t opt in unless you are registered so signing the declaration to say that you may be eligible, we don’t consider that to be an issue. To avail of the scheme, you need to be sure that you meet the eligibility criteria.
Q: One of the eligibility criteria of the scheme is that a business is expected to experience a 30% reduction in turnover or orders this year. How does a company predict performance and over what time frame?
A: The scheme covers the 6 months period from the 1st of July 2020 to 31st December 2020. That is the period a company will examine its turnover. However, it will be difficult if not almost impossible for a company to determine eligibility during that period consistently.
What we are advising clients to do is to examine the period from the start of the scheme, which is the 1st of July up to the current month end – the 31st August – to determine eligibility in the coming weeks in September. Similarly, to check eligibility in late September/early October, look at turnover from 1st July to the end of September. Continue to extend that period of forecast as each month expires so that by the end of the scheme in December, when looking at December payroll, you will have an outlook from July to November. We think that this is the only feasible way to do it. And again, you can opt out of the scheme and opt back in, however you need to be registered for the scheme to opt in in the first instance. That is why we are advising clients to register now.
Q: To clarify, even if a company is registered for the current scheme – the Temporary Wage Subsidy Scheme (TWSS) – they still must register for the new scheme – the Employment Wage Subsidy Scheme (EWSS)?
A; Absolutely. Companies need to register. TWSS expires on August 31st. Also, the rule of the scheme is that you cannot opt back backwards, in other words, if you want to avail of the EWSS commencing on the 1st of September you need to be registered by the 1st of September. Likewise, if you want to avail of it on the 1st of October, you need to be registered by the 1st of October. If you wish to avail of the scheme in September and you register on the 1st of October, you will NOT be permitted to opt backwards. The best thing to do is register now so you can opt in as and when you choose.
Q: Employees taken on after 28th February 2020 and not included under TWSS, will now be included under the EWSS?
A: Correct. Under TWSS, which expired on 31 August, the cut off for employees was 28th February 2020, so any employees taken on after this date were not eligible for the wage subsidy scheme. For employees in your employment at the 1st of July, who were not eligible for the TWSS, you will be able to apply retrospectively under the EWSS. Support for these employees can be claimed under a ‘sweepback scheme’.
- Update 02/09/2020: The ‘ Sweepback’ scheme template may be uploaded from 15 September. Under EWSS, eligible employers may now claim for employees in employment from July 1st , (seasonal workers/new hires) who were not eligible under the previous TWSS. Guidelines on completing the ‘sweepback’ template and using the new upload facility in ROS will issue on 8 September. Read more
Q: How do businesses deal with this week’s payroll?
A: We don’t have any guidance as yet from Revenue on this however as the scheme expires on August 31st, my view would be if you apply a payroll date beyond the 31st August, in other words if you apply with a payment date of 1st or 2nd or any time during September, Revenue may not permit the payment under the scheme so we are advising you to submit with a payment date no later than the 31st of August.
Q: Can Proprietary Directors avail of the scheme?
A: Legislation says that they are not eligible for the scheme however revision is being made. One of the revisions that was announced is that Proprietary Directors can avail of the scheme however the anomaly that has yet to be decided upon is the instance where the sole employees of a business are Proprietary Directors, and if they can qualify. We have no clear answer to this yet however we will keep you updated.
Q: What is the tax liability for employees?
A: From September, the administration of payroll reverts to the normal administration process, in other words full tax will be collected by the employer. The normal gross pay with all your tax deductions will be collected by your employer, remitted to the revenue as usual, and for any eligible employee, the employer will receive a rebate equivalent to their eligibility. Taxes will revert to the normal administration process.
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