We are happy to share with you some of the key rules and guidelines regarding qualifying, registering for and exiting Employment Wage Supplement Scheme (EWSS) in 2021
By way of introduction, the Employment Wage Supplement Scheme (EWSS) replaced the Temporary Wage Subsidy Scheme (TWSS) which was introduced by Section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020 which ceased on 31 August 2020.
In order to facilitate prompt and timely payments, the scheme is administered by Revenue on a “self-assessment” basis. While this is supportive to making timely and prompt payments, they have stated they will operate a zero tolerance policy in accordance with the specific anti-abuse measures contained in the legislation. It is therefore important to avoid errors when applying.
|Clearance. Rules. Guidelines. Eligibility.|
You must have an up to date tax clearance and continue to maintain tax clearance for the duration of the scheme.
- Tax Clearance will be granted if your tax affairs and, where applicable, your connected parties, are up to date.
- A full list of what revenue define as connected parties is available.
- If you or any connected parties have outstanding returns or debts, tax clearance will be refused.
- It is therefore imperative that all tax returns are filed and payments made, or payment arrangements entered into to cover all outstanding debts before applying for EWSS.
Alongside the need for tax clearance, the scheme has a number of rules that need to be understood and followed, for example:
- The scheme is open to employers who file their payroll submissions electronically through Revenue Online Service (ROS).
- It provides a flat-rate subsidy to qualifying employers based on the numbers of paid and eligible employees on the employer’s payroll.
- It charges a reduced rate of employer PRSI of 0.5% on wages paid which are eligible for the subsidy payment.
The rationale for making payments to employees is discretionary regarding being in work or out of work, for example:
- If eligible employers choose to retain eligible employees on the payroll while the business is wholly or partially closed, EWSS can still be claimed in respect of wage payments made to those employees.
- There is no legislative requirement that employees are actively working to be eligible for the EWSS.
- The scheme does not affect any legal obligations the employer may have to their employee as regards terms, conditions or entitlements of their employment, including pay.
Turnover Eligibility Criteria
In addition to tax clearance, revenue rules and the guidelines as listed above, you must be able to demonstrate your business is expected to experience a 30% reduction in turnover or orders between January 1st to June 30th for 2021 pay dates. This calculation is looking at the period as a whole rather than on a monthly basis and the business disruption must be caused by COVID-19.
The following timeframes apply to calculation of the reduction in turnover or orders.
- Reduction in turnover or orders relative to the same period in 2019 where the business was in existence prior to January 1st 2019.
- Where the business commenced trading between January 1st and May 1st 2019 the date of commencement is June 30th 2019.
- Where a business commenced after May 1st 2019, the projected turnover, orders from January 1st 2021 to June 30th 2021.
(This is compared to what the projections may have been if COVID-19 had not occurred.)
Points to Note.
The points listed below are some of those most relevant of consideration when applying for EWSS.
- Turnover Defined.
When undertaking a review of the potential drop in turnover, you need to include all sources of trade income, specifically including sales, donations and any state funding.
Appropriate documentation must be retained. Includes copies of projections demonstrating eligibility during specified period/s.
- Monthly Eligibility Review.
You are required to undertake a review on the last day of every month to ensure you continue to meet the eligibility criteria.
Please note that the final month of the Employment Wage Supplement Scheme is exempt from this requirement.
- January 2021 Claim.
To ensure eligibility to claim in January 2021, your December 31st eligibility review must be based on the January 2021 criteria.
- Proprietary Directors.
In recognition of the key role played by certain proprietary directors in providing employment to others, especially in the SME sector, Finance Act 2020 amendments have included proprietary directors in the scheme from 1 September 2020, subject to certain conditions.
Certain categories of employees are specifically excluded.
- New Employees.
New employees / movement of employees under Transfer of Undertakings (TUPE) legislation, is allowed provided such recruitments/movements are undertaken for bona fide business purposes and not with the intention to maximise subsidy claims.
Included in the legislation are other points that may be relevant to your role as an employer, therefore important to confirm everything.
|Rate of Subsidy|
On the 19th October 2020, the Minister for Finance announced increased subsidy rates to be applied to paydates on or after 20th October 2020 until 31 January 2021. These are as follows:
|Exit & Deregister in 2021|
Please read the steps to follow if you no longer qualify for EWSS.
- No Longer Qualify at End of Month.
If you no longer qualify based on projected turnover or orders, you must deregister for Employment Wage Supplement Scheme on ROS with effect from the following day (that being the 1st of the month) and cease claiming the subsidy.
- No Longer Qualify before End of Month.
If you become aware prior to the end of the month that you will no longer meet the eligibility criteria you should deregister immediately and cease to claim subsidies. Subsidies correctly claimed prior to deregistration will not be repayable.
- Turnover Circumstances Change.
If circumstances change in the following months and you are eligible to claim again, you can reregister and claim from the date of reregistration. It is not possible to backdate the claim to include the period of deregistration.
When you decide to apply part of the registration process is you will be required to agree to the following declaration:
I declare that I have read the eligibility criteria for the Employment Wage Subsidy Scheme and that the business qualifies for the scheme. I undertake that the business will abide by the terms and conditions of the scheme. I understand and accept that failure by the business to adhere to the terms of the scheme could result in recoupment of monies together with interest, penalties and prosecution. I undertake that the business will retain all records relating to the scheme, including the basis of eligibility, for review by Revenue.
It is clear, based on the wording of this declaration, that registration should not be applied for until you are satisfied you qualify for the scheme understand the reporting requirements and can comply with all self-assessment requirements.
Registration is allowed at any time throughout the lifetime of the scheme.
Hopefully this information has helped with your understanding of the EWSS.
We would like to stress you may need further information relevant to your unique circumstances. If so, please do not hesitate to email or call us at any time. We would be happy to provide direction and guidance to help you get what you need from EWSS.
E-mail: email@example.com. Telephone: 01 612 0429