COVID-19: Shining a light on the Employment Wage Subsidy Scheme

Registration requirements for the Scheme

The EWSS will come into effect on 1 September, 2020. Employers who wish to avail of the EWSS will be required to undertake a separate registration with the Revenue Commissioners through the Revenue Online System (ROS). Registration for the Scheme opened on 18 August 2020.

It will be necessary to meet the following requirements in order to register for the Scheme:

• The employer must be registered for PAYE or PRSI;
• There must be a bank account linked to the registration (and into which subsidy payments will be made);
• The employer must hold a valid Tax Clearance Certificate, i.e. all tax returns must have been filed and all outstanding liabilities either settled with Revenue or alternatively subject to a payment arrangement with the Collector General or 'warehoused'.

Revenue has confirmed that registrations cannot be backdated and subsidy claims can only be made once registration has occurred. Employers who operate payroll weekly may need to consider registering as soon as possible to ensure that they can claim the subsidy in respect of the first pay period in September.

The eligibility criteria for employers

In order to qualify for the subsidy, Revenue has confirmed that an employer must be able to demonstrate the following:

• An expected or projected 30% reduction in 'turnover' or customer orders in the period 1 July 2020 to 31 December 2020, looking at the period as a whole (as opposed to on a month by month basis);
• This reduction is relative to turnover for the same period in 2019 (or potentially subject to a shorter 2019 reference period for newly established businesses); and
• The disruption to business must be caused by or result from the impact of COVID-19.

2.1 Demonstrating a reduction in turnover

Turnover in the context of the EWSS is to include all sources of trading income, including sales, donations and State Funding. Revenue will typically review the reduction in turnover as it applies to the business as a whole. However where a part of the business is formally structured into a business unit(s), and one (or more) business unit(s) suffers a 30% decline in turnover or customer orders, that unit may qualify for the EWSS. Revenue has indicated that they are likely to examine such cases carefully.

2.2 Demonstrating a reduction in customer orders

Where an employer seeks to meet the eligibility criteria based on a reduction in customer orders, Revenue have provided guidance in respect of the factors indicative of such a decline for different businesses. These include:

• The hospitality sector (the percentage reduction in bookings);
• Food and retail outlets (the percentage reduction in cash, credit, online or telephone orders);
• Call centres (the percentage reduction in the volume of calls);
• Transport providers (the percentage reduction in online bookings, passenger journeys or passenger ticket sales);
• Energy suppliers (the percentage reduction in the volume of energy consumed).

If, due to the nature of the business, a 'turnover' or 'customer order' model is inappropriate, Revenue will consider an alternative 'reasonable' basis, subject to their prior agreement and where it can be demonstrated that the disruption to business was as a result of COVID-19.

Payroll processing considerations

The subsidy will be available in respect of employees on the employer's payroll and in receipt of gross weekly wages of between €151.50 and €1,462. An employee's gross wage is that which is reported on the payroll submission and is inclusive of benefits in kind but before deductions such as pension and any salary sacrifice arrangements.

Revenue's systems will calculate the subsidy by reference to the eligible employee's gross wage, their pay frequency and their insurable weeks. Individuals with a pay frequency greater than monthly will not qualify for the EWSS.

The following payroll issues should be noted:

• Employers will process payroll subject to Class A PRSI (including a temporary employer PRSI rate of 11.05%);
• Following the monthly payroll submission, Revenue will post a 'PRSI credit' to the employer return, reducing the overall employer PRSI payment to 0.5% in respect of eligible employees;
• Care needs to be taken when filing the monthly payroll submission via ROS. Revenue has engaged with the major payroll software providers advising them of the necessary changes to process the EWSS;
• The EWSS should not be shown on the employee's payslip.

Once an eligible employer has submitted the payroll notifications to Revenue for a month, Revenue will calculate and notify the subsidy amounts due to the employer by the 5th day following the month end. If necessary, employers can amend their submissions up to the payroll return filing date (i.e. the 14th day following the month end). Subsidy payments will be issued to employers as soon as possible after the 14th.

Revenue reviews

Revenue has indicated that they will actively review the operation of the EWSS. The key aspects to bear in mind are:

• Employers are expected to assess their eligibility and continued participation in the EWSS;
• Employers must undertake a review at the end of each month to assess whether they continue to be eligible for the Scheme;
• Revenue will intervene directly in cases of suspected abuse (such as manipulation of wages in order to claim an increased EWSS);
• Revenue will conduct a review in cases where an employer seeks to amend a payroll return after the due filing date whilst claiming EWSS;
• Employers are expected to retain all documentation and work papers in respect of their initial and ongoing assessment as to eligibility.

Where an employer, in good faith, entered into the EWSS and following a monthly review forms the view that they no longer qualify for the Scheme and de-registers, Revenue have confirmed that any subsidies claimed in accordance with the Scheme will not be repayable.

Miscellaneous issues connected with the operation of the Scheme

The guidelines deal with a number of miscellaneous matters. These include:

• Confirmation that subsidy payments are taxed on the employer as part of their trading income (but are ignored for the purposes of calculating the 30% reduction in turnover);
• The EWSS can apply with effect from 1 July 2020 in respect of a small group of employees. These include instances where the employer was not eligible for the TWSS (for example a business which commenced trading after 29 February 2020) or the employer had employees who were not eligible for the TWSS (e.g. new hires or seasonal workers). Employers have until 5 September to submit to Revenue the appropriate electronic template claiming the EWSS for such employees.

Actions employers need to take now

• Undertake a review of whether they meet the eligibility criteria;
• Register for the EWSS before the first pay period in September;
• Discuss your participation in the EWSS with your payroll provider to ensure they have the capability to process EWSS payments correctly;
• Undertake ongoing eligibility reviews at the end of each month;
• Retain all supporting documentation surrounding the business' projected reduction in turnover for eligibility purposes as well as the documentation around the ongoing monthly reviews;
• If you have employees who did not avail of the TWSS and who may qualify for EWSS from 1 July 2020, ensure that you meet the registration and submission deadline of 5 September 2020.

We are here to help you

The EWSS is substantially different to its predecessor, the TWSS, and its implementation may prove complex for your organisation. Should you have any queries regarding how the EWSS may apply to your business, please reach out to your usual PwC contact or any member of the team below.