The Employment Wage Subsidy Scheme - What Every Employer Needs to Know
Hi there, everyone.
I just wanted to come on and speak a little bit more about the Employment Wage Subsidy Scheme.
I just want to break it down in as simple terms as I possibly can, so that you'll know if it's relevant to you and if it is relevant, what you should do next.
So the first thing I would say is that it's really important to understand that this is a completely different subsidy scheme to the Temporary Wage Subsidy Scheme.
The Temporary Wage Subsidy Scheme was essentially a subsidy that was payable to employees, and the employers were merely the way that the government got the money
into the hands of employees. But essentially the subsidy was for employees.
How the Employment Wage Subsidy Scheme is different is that it is a subsidy that is payable to the employer.
OK, so for payroll's that are run after the 1st of September for all of you that are employees that get paid via payroll, you're now going to be paid as you were normally before and your normal pay, it's going to be taxed.
And your employer or you as the employer, you're going to receive a subsidy directly to you.
So first things first, you need to establish are you eligible as an employer for this subsidy?
There's one simple criteria, well, I say simple...
Your turnover for the period from the 1st of July 2020 to the 31st of December 2020
needs to be at least 30 percent less than it was for the same period last year, the same period last year, being from 1st of July 2019 to the 31st of December 2019.
Now, obviously, we're sitting here in August, how are you supposed to know what your
turnover is going to be at the end of December? So what Revenue have advised is on a monthly basis, so say on the 1st of each month, you need to reassess your position or reassess your eligibility,
Say, for example, on the 1st of September, you need to look at your turnover, your sales figure, from the period the 1st of July to the 31st of August, and compare that figure for the same period last year.
And if that figure is at least 30 percent less, then you are eligible, you are currently eligible for the scheme.
You need to conduct the same process on the first of each month thereafter, so say on the 1st
of October, you need to look at your sales from the 1st of July 2020 to the 30th of September 2020 and compare those figures with the same period last year and if you were more than 30 percent down, in sales terms, you still maintain your eligibility for the scheme.
And basically, when we get to the 1st of January, 2021, Revenue will take a look at the whole six month period and as long as within the whole six month period from the 1st of July 2020 to 31st of December 2020, that your turnover for that period, your sales for that period, was at least 30 percent less than it was for the same period in 2019.
You were eligible for the scheme all along, you were entitled to have claimed the scheme all along.
OK, that was a lot for the first part, but it's important because obviously if you claim for a scheme that you aren't entitled to claim, the chances are you're going to have to pay it back.
So it is really important to be very clear on your eligibility.
So second thing, once you've established you're eligible, what do you do?
Well, you need to have tax clearance in order to apply for this scheme.
I spoke about this yesterday. I have a video there walking you through the steps of how to do this, it's on my Stories from yesterday, go back into the highlights if you need to see it. (See my Instagram Account @traversaccounting).
If you already have your tax clearance in place, you can go straight to apply for the scheme via ROS.
Again, I've previously done a video on walking you through visually the steps involved in applying for this, so you should go back through the highlights and look for that video.
So once you're signed up for the scheme, from this point, now once you run a payroll, as in, there is a payment after the 1st of September, then this scheme is in place.
So you revert to paying your employees in a normal fashion, as in pay their gross pay as you did pre-COVID, pre the Temporary Wage Subsidy Scheme, taxed in the normal fashion, and you will then receive a subsidy towards those employees.
Now currently that subsidy, you're not going to receive it until midway through the following month, which is different to the Temporary Wage Subsidy Scheme.
And the Minister today did say that will be under review because it would be better if employers received that subsidy sooner.
So just a word for anybody watching who is an employee, so you will see a difference in your pay slip, in your pay next week, and it really will be back to pre-COVID, getting paid your normal pay based on your normal rate.
And so just bear that in mind that there is a change.
The good thing, though, unlike the Temporary Wage Subsidy Scheme and anybody who was on the Pandemic Unemployment Payment and I mean, it is a good thing, you will be taxed
on that pay in the normal way.
So you're not building up any untaxed income as you were with the previous scheme.
I'll talk about that on a different video.
But yeah, it's pretty much back to normal for employees.
For employers, a key difference between this scheme and the Temporary Wage Subsidy Scheme is that it's not just employees who were on payroll in January and February who are eligible.
This subsidy is available for new hires, for seasonal workers.
The idea behind it is to encourage employers to hire people.
So that's a key difference between the Employment Wage Subsidy Scheme and the Temporary Wage Subsidy Scheme.
OK, so the rates that are available, this is very important. So for somebody whose gross pay
is less than €151.50 per week, there is no subsidy available.
But for somebody whose gross pay is between €151.50 and €202.99, there is a subsidy of €151.50 available per week to the employer.
The second rate of the subsidy is for those who have employees on gross pay between €203 and €1,462 per week, the subsidy available to the employer in that case is €203.
For anybody, for any employees earning a gross pay of more than €1,462 per week there is no subsidy available.
A key point that was made today by Paschal Donohoe at his press conference was that if you're an employer currently paying a part time member of staff less than €151.50 per week, you're not going to get the Employment Wage Subsidy Scheme. But if you give that part time
employee an extra hour's work, that will bring their pay above €151.50 and you will then receive, by virtue of having gross pay over that, a subsidy which is the equivalent of €151.50.
So essentially, the scheme encourages employers to retain their part time employees and to give them extra hours.
There is an awful lot of information in this scheme, and I'm not going to go on much more, just the key points are:
- check if you're eligible
- if you are apply for your tax clearance or
- if you have your tax clearance then apply for the scheme.
- and then you must operate this scheme on your payroll from the 1st of September, and for any payment dates for payroll from the 1st of September onwards.
OK, hopefully this was helpful.
So for anybody that's still with me fair play to you, I know that was an awful lot to digest and in hindsight it was probably a little bit too much!
But I suppose the nature of the material I'm dealing with, it can be hard to get it into small,
manageable chunks without leaving out key information.
So hopefully anyway I've got the point across.
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