The Employment Wage Subsidy Scheme (EWSS)

The Temporary Wage Subsidy Scheme (TWSS) has been an important support for many employers since the end of March 2020. The government has now announced that this scheme is being phased out and replaced with the EWSS.

The EWSS is a simpler scheme to administer than the TWSS, although in most cases the level of subsidy will be lower. There will be two levels of subsidy payable:

• Where the gross weekly wage of an employee is between €203 and €1,462, the subsidy will be €203 per week
• Where the gross weekly wage is between €151.50 and €202.99 per week, the subsidy will be €151.50 per week;
• Where the gross weekly wage is less than €151.50 or greater than €1,462, no subsidy will be payable.

Unlike with the TWSS, the employee’s wages will be taxable through payroll in the normal manner and subject to PAYE, USC and PRSI. The reduced rate of Employers’ PRSI of 0.5% will still apply.

In order to qualify for the EWSS, the employer must be able to demonstrate that as a result of the disruption caused by COVID-19, their business will experience a 30% decline in turnover or customer orders in the period from 1 July 2020 to 31 December 2020, relative to the same six-month period in 2019. Where the business commenced after 1 July 2019, special provisions apply; for example, where a business commenced on 1 September 2019, then the comparison is between the four-month period from 1 September 2019 to 31 December 2019 and the same four-month period in 2020. Where the business commenced on or after 1 November 2019, the comparison is between the expected turnover/customer orders for the period 1 July 2020 to 31 December 2020 and the turnover/customer orders that would have arisen in that period were it not for the impact of the pandemic. 

Employers are required to review compliance with these criteria on a monthly basis, and where it becomes evident that the decline will be less than 30%, they are obliged to stop claiming the EWSS. This test is applied on a cumulative basis, so if turnover/customer orders are not down by 30% in a given month, the employer does not necessarily cease to qualify immediately; rather, they must review on a monthly basis whether the reduction will be at least 30% over the six-month period. Once it becomes evident that it will not, they must stop claiming the EWSS from the first day of the following month.

The EWSS will apply from 1 July 2020 to 31 March 2021. Any employees on the payroll during that period will qualify, as will employees who were already eligible for the TWSS. Where an employer is currently availing of the TWSS, they must continue to use that scheme until 31 August 2020; they may however avail of the EWSS for any employees who did not qualify for the TWSS (for example, new hires or seasonal workers) with effect from 1 July 2020. On 31 August 2020, the TWSS will cease and the employer may only avail of the EWSS.

In order to avail of the EWSS, an employer must hold a valid tax clearance certificate. Otherwise, they will cease to qualify. 

If you require assistance in accessing these supports or with any challenges you currently face during this crisis, please contact a member of the tax team or your normal Crowe contact.