The Temporary Wage Subsidy Scheme (TWSS) introduced by the government on 26th March 2020 is now coming to an end on 31st of August 2020. It will be replaced by the Employment Wage Subsidy Scheme (EWSS) which will run until 31st March 2021.
Under the EWSS employers will be able to seek wage subsidies for a broader range of workers, including seasonal and new hires. Under the new system (EWSS) the maximum subsidy available per worker will fall from €410 to €203 per week.
Additionally, instead of being a percentage of the employee’s net pay, there will be two fixed rates of pay for workers: €151.50 or €203.
Minimum and maximum earning requirements have also been set in place. A person who earns between €151.50 and €1,462 per week will be eligible for EWSS.
|Employee gross wages||Subsidy|
|Less than €151.50||Nil|
|From € 151.50 to € 202.99||€151.50|
|From € 203 to € 1,462||€203|
|More than € 1,462||Nil|
Initially, under TWSS (the old scheme) to be a qualifying business, the business had to forecast a loss of at least 25% of their turnover, under EWSS this loss of turnover required has been increased to 30%.
Employers will also have to hold a valid Tax Clearance Certificate showing the tax affairs of the business are in order.
Under the TWSS the employer receives the subsidy sum within 48 hours of lodging payroll information with the Revenue. Under EWSS, the timeframe for receiving the same sum could be as long as 6 weeks.
There is no subsidy for workers earning below that €151.50.
The biggest issue for employers will be obtaining a Tax Clearance Certificate if they do not already have one because the employer will be ineligible for the scheme without a tax clearance certificate.
There are 2 elements to the EWSS:
- a flat rate subsidy to qualifying employers and
- a reduced rate of employer PRSI of 0.5% on wages paid which are eligible for the subsidy payment.
The two main criteria for eligibility are that the employer has a tax clearance certificate and their business is expected to experience a 30% drop in turnover between 1st July 2020 and 31st December 2020 and the cause of the drop is the effects of Covid 19.
Childcare businesses registered in accordance with section 58 C of the Child Care Act 1991 do not have to show the turnover drop.
Employers must carry out a monthly review to check they are still eligible for the scheme.
Change in employment contracts/terms and conditions
The EWSS has no impact on the existing terms and conditions of the employee’s employment. These can only be changed with the consent of the employee.
PAYE and PRSI
The normal operation of the paye and prsi system will be restored with Revenue applying the reduced rate of 0.5% employer prsi. This will occasion the calculation of a prsi credit due to the employer creating a reduction in the monthly tax balance due.
You will find more information about the EWSS on this page of the Revenue Commissioners website.