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On 9 July 2021, Revenue released updated guidance on the operation of the Employment Wage Subsidy Scheme (EWSS) which will apply in respect of pay dates on or after 1 July 2021. The introduction of the scheme was provided for in the Financial Provisions (COVID-19) (No.2) Act 2020 (Act No. 8 of 2020), which was signed into law on 1 August 2020. The main change to the scheme from 1 July 2021 is in relation to employer eligibility.

While most of the key points provided for in the guidance have already been publicised either in the Act or in commentary around the Act, the guidance does provide additional practical insight into the operation of the scheme as well as a bit more clarity in respect of assessing employer eligibility.

An overview of the new EWSS, including a summary of main points to note from the Revenue guidance is set out below (the full guidance can be found here). Updated guidance from 1 July 2021 can be found here.

How are employers and employees eligible for the new EWSS?

Employer Eligibility from 1 July 2021

To be eligible to participate in the EWSS, the employer must be able to demonstrate to the satisfaction of the Revenue that, their business has been significantly disrupted by reason of COVID-19. Specifically, the employer needs to demonstrate at least a 30% decline (or such other percentage as the Minister for Finance may specify) in either the turnover of the employer’s business or in customer orders received during the financial period 1 January 2021 to 31 December 2021, for paydates on or between 1 July 2021 – 31 December 2021. Revenue has set out examples of how to assess the decline in customer orders in different sectors in their new guidance. Where it is not possible to apply the turnover test or customer order test to the business in question, an alternative reasonable basis may be applied. In such cases, guidance should be sought from an employer’s local Revenue district before entering the scheme.

In cases where the business of the employee has not operated for the whole of the corresponding period in 2019, the following will apply:

  1. Where the business operations have commenced on or before 1 November 2019, the 30% decline test must be determined from the date of commencement to 31 December 2019.  For example, if the employer’s business commenced on 1 September 2019, then a 30% decline in the period 1 September 2019 - 31 December 2019 must arise as compared to 1 September 2021 - 31 December 2021.
  2. Where the business operations have commenced after 1 November 2019, the employer must be able to demonstrate a decline of 30% of projected turnover or customer orders from 1 January 2021 (or date of commencement if later) to 31 December 2021. Comparison should be against projections prepared as if the pandemic had not occurred, for example banking or grant application projections.

Examples of how this works are as follows:

Date Trade Commenced  2021 Turnover/ Customer Orders Relevant Period Comparison Period 
Prior to 1 January 2019  1 January 2021 – 31 December 2021  1 January 2019 – 31 December 2019 
Between 1 January 2019 – 31 October 2019  Commencement date in 2021 – 31 December 2021  Commencement date in 2019 – 31 December 2019
On or after 1 November 2019  1 January 2021 (or commencement date of later) – 31 December 2021 2021 projections prepared as if pandemic had not occurred 

The 30% reduction in turnover or customer orders may be applied at the level of the entity as a whole or, where formally structured into individual business divisions before pandemic restrictions applied in March 2020, at the level of the individual business division. In these cases, each business division of such an entity meeting the eligibility criteria may be eligible for the scheme. While an employer may apply the eligibility tests to each business division separately, the employer will need to prove that each separate business division meets the eligibility criteria.

Depending on the structure of the entity, a single employer registration for a number of separate divisions may be in place. Provided it can be demonstrated that specific employees were wholly or mainly (more than 50%) employed in the impacted division, a subsidy may be claimed in respect of that employee. Similarly, employees based in a head office division may be treated as eligible employees to the extent that their working time is spent wholly or mainly (more than 50%), performing functions related to the eligible business division.

In addition, where an employee is employed in an associated company but provides services wholly or mainly to a company meeting the eligibility criteria, the employing company can claim a subsidy in respect of that employee.

Helpfully, under EWSS, there is no requirement for the employer to have to demonstrate an inability to pay wages which caused significant confusion and uncertainty amongst employers under the TWSS.

Continued Review of Employer Eligibility

While employers were always required to review their eligibility at the end of each month, new guidelines confirm that employers will need to submit an online monthly Eligibility Review Form on ROS. The initial submission should be made by 15 August 2021. It should be noted that the initial form cannot be altered once submitted to Revenue, however, if errors occurred upon completing this can be queried with Revenue.

Where an employer has a number of separate business divisions, one submission should be made incorporating the information for all eligible businesses. If an employer has an eligible business(es) as well as a registered childcare activity and/or a business which commenced on or after 1 November 2019, the submission should exclude the registered childcare activity and any separate business activity which commenced on or after 1 November 2019

Employers will need to provide details such as:

— Actual monthly (VAT exclusive) turnover or customer orders for 2019

— Actual monthly (VAT exclusive) turnover or customer order for 1 January – 30 June 2021

— Projected monthly turnover or customer orders for 1 July – 31 December 2021

On the 15th of every subsequent month in which the scheme is in operation, employers will be required to provide details of the actual results for the previous month, in addition with reviewing the original projections provided for the next months, to ensure they remain valid.

This can be summarised as follows:

Employer Eligibility Submission Due Date

 Actual Monthly Figures

Projected Monthly Figures                 

15 August 2021

January - December 2019

January - June 2021

July – December 2021

15 August 2021

July 2021

August - December 2021

15 September 2021

September 2021

September - December 2021

15 October 2021

September 2021

October - December 2021 
15 November 2021 October 2021  November - December 2021 
15 December 2021 November 2021 December 2021

 

As part of the monthly EWSS Eligibility Review submission, a declaration needs to be signed by employers (or agents) to confirm the information provided ‘represents a true and accurate record’. Failure to complete and submit the EWSS Eligibility Review forms will result in suspension of payment of EWSS claims.

Any employer who is entered in the register established and maintained under the Child Care Act 1991 will be considered eligible for the scheme without having to satisfy the reduction in turnover or customer order tests. These businesses are required, under the new guidelines from 1 July 2021, to complete a once-off ‘declaration of exemption’ before 30 July, as part of the Employer Eligibility Review on ROS. This would include pre-schools, play groups, creches and other services catering for pre-school children in addition to creches etc. that cater for primary school children. 

In order to be eligible for the EWSS throughout the entire period, the employer must be entitled to a tax clearance certificate. If an employer does not currently hold tax clearance, an application can be made online via ROS under the “Manage Tax Clearance” option.

If, as a result of the review, it transpires that the employer does not meet the eligibility criteria, they should withdraw themselves from the scheme on ROS with effect from the first day of the following month. Revenue will also carry out systematic checks on a monthly basis and where an employer no longer satisfies the eligibility criteria, a warning will appear on ROS instructing the employer that they are no longer eligible for EWSS and they must deregister and cease claiming the subsidy immediately.

Where the employer becomes eligible once more in following months, they can re-register for the scheme and claim from the date of re-registration. The claim cannot be backdated for the period of de-registration. 

Employee Eligibility

An employee in receipt of gross wages of between €151.50 and €1,462 (subject to the below exception) for an eligible employer will qualify as an eligible employee. 

The EWSS definition of eligible employee includes an individual who is on the payroll of the employer at any time in the “qualifying period” i.e. at any time between 1 September 2020 and 31 December 2021.

The EWSS may be claimed in respect of a Proprietary Director (PD) where:

  1. The employer meets the eligibility criteria for the EWSS,
  2. The PD is on the payroll of the eligible employer, and
  3. The PD has been paid wages which were reported to Revenue on the payroll of the eligible employer at any stage between 1 July 2019 – 30 June 2020. 

Revenue have confirmed a claim for the EWSS may only be made by one company for the duration of the scheme. The PD is required to elect which company will make the EWSS claim. The election made by the PD cannot be changed during the period of the scheme. The election is deemed to be made on the first submission of an EWSS claim in respect of the PD. 

Revenue guidance also confirms that an individual who is connected with the employer (unless such connected person received pay from the employer between 1 July 2019 and 30 June 2020) is excluded from EWSS.

The extension of the EWSS to seasonal workers and new hires is very welcome, particularly to those sectors such as hospitality or other seasonal businesses who perhaps have been closed since February 2020 or operating at a reduced capacity.

Revenue guidance confirms that employees otherwise employed as part of a business e.g. domestic employees such as childminders, housekeepers, gardeners etc are not eligible for the EWSS.

Rates of subsidy payable

Under the EWSS, eligible employers will receive a per-head subsidy on a flat rate basis which will be determined based on the amount of gross pay that the employer pays to the eligible employee as follows:

 

Gross Pay

Subsidy Payable

<€151.50

€0

€151.50 - €202.99

€203 per week

€203 - €299.99

€250 per week

€300 - 399.99

€300 per week

€400 - €1,462

€350 pwe week

>€1,462

€0

 

The current rates of EWSS will remain in place until 30 September 2021. Subsidy rates to be paid from 1 October 2021 will be provided in September 2021 by Revenue. 

Operational aspects of the EWSS

i) Registration for the EWSS

The employer will be required to register for the EWSS on ROS. As part of this registration process, the employer will be required to declare that the eligibility criteria are met. The date of registration cannot be backdated prior to the date of application. 

ii) Claiming the EWSS

Under the new EWSS, the subsidy to be paid to the employer is akin to an employment support grant. Under the new scheme, the employer will pay the employee their normal wages and will then receive a subsidy from the Revenue in respect of each eligible employee following submission of the payroll return based on the table set out above.

To indicate that a subsidy is being claimed for an eligible employee, 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 payroll software capabilities) as the value of the payment.

The subsidy will be paid by Revenue to the employer directly into the employer’s bank account on file on ROS within two working days of receipt of the payroll submission. 

iii) Tax and PRSI position

Revenue has confirmed that all gross payments made to employees under the EWSS should be fully liable to PAYE, USC and PRSI in the normal way.

However, while employer PRSI will have been included at the higher rate through the payroll submission, a reduced rate of 0.5% will apply for employments that are eligible for the subsidy. Revenue will make an adjustment to the liability returned in the payroll submission, reducing the amount that becomes due and payable for the relevant month. 

EWSS Declaration and Eligibility Review Form Completion

Effective from 1 July 2021, employers will be required to submit a declaration and Eligibility Review Form on ROS. The initial form is due between 21 – 30 July and monthly thereafter by the 15th of the month. This can be submitted under the ‘EWSS Eligibility Review’ section in the Employer Services section on ROS. The initial form cannot be altered once submitted to Revenue. If errors occurred upon completing, this can be queried with Revenue. 

iv) Publication

As was the case for the TWSS, the names and addresses of all employers who receive a wage subsidy payment under the new EWSS will be published on revenue.ie. 

Compliance Checks

Revenue is undertaking real-time checks of PAYE compliance of employers who are availing of the scheme and cross-referencing claim data against other Revenue data sources to identify anomalies or trends requiring attention. Concurrently, Revenue are carrying out real-time engagements with employers to ensure the correct EWSS entitlement.

Revenue are also carrying out a follow-up programme of compliance interventions in accordance with the Code of Practice for Revenue Audit and Other Compliance Interventions, with employers who display high risk indicators and are availing of the scheme.

v) Anti-avoidance

Certain anti-avoidance provisions were included in the Act which seek to counteract:

  1. contrived situations whereby any gross pay due to an employee is deferred, suspended, increased or decreased with a view to securing the wage subsidy, or
  2. situations where an employee is laid off and removed from the payroll and replaced with two or more employees in relation for whom the subsidy would be available.

Revenue confirmed in their guidance that safeguards will be included to minimise abuse by employers in this regard. If Revenue identify any such cases, the employer will be treated as having never been eligible for the scheme and any subsidy payments received would need to be refunded, together with possible interest and penalties.

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