The Employment Wage Subsidy Scheme has been in operation since 1 September 2020.
Revenue previously published guidance on the scheme which we considered in our briefing here. In its most recently updated guidance, Revenue has provided further clarification on the operation of the scheme. We consider some of the key points below.
Comparative period does not change for new operators of an existing business
As part of the qualifying criteria for employers for the scheme, they must demonstrate a 30% reduction in turnover or orders as a result of COVID-19. The comparative period is between 1 July and 31 December 2020, and for example, the same 6 month period in 2019 if the business was in existence prior to 1 July 2019.
Revenue has now clarified that the eligibility period to be reviewed for comparative purposes relates to the trade or business, rather than the operating entity. The example is given of where a sole trader incorporates a business on 1 January 2020, the comparative review period for the newly incorporated company will be the 2019 sole trader turnover i.e. it will be treated as an existing business for the purposes of the 30% test.
Clarity on the treatment of certain Government grants for assessing EWSS eligibility
The treatment of Government grants and public funding for the purposes of determining a reduction in turnover will be dependent on the nature of the grant or funding arrangement.
Revenue has confirmed that it regards the recently announced Restart Grant as capital in nature and therefore not included in the definition of turnover for the purposes of assessing employer eligibility for EWSS.
Clarity on the treatment of proprietary directors for assessing EWSS eligibility
On 31 August, it was announced that the EWSS can be claimed in respect of proprietary directors, subject to the following conditions:
- the employer meets the eligibility criteria for the EWSS,
- the proprietary director is on the payroll of the eligible employer, and
- the proprietary director has been paid wages which were reported to Revenue on the payroll of the eligible employer at any stage between 1 July 2019 and 30 June 2020.
Where a person is a proprietary director of two or more eligible companies, a claim for EWSS can only be submitted in respect of a single company. The proprietary director will be required to elect one company for the purposes of making EWSS claims for the duration of the scheme. Once an election is made it cannot be changed during the term of the scheme.
Our briefing on the announcement is here. This clarification relating to proprietary directors has now been added to the updated Revenue guidance on the EWSS.
Clarity on the definition of turnover for financial institutions
Financial institutions are directed towards the advice of the European Banking Authority which has confirmed that the definition of turnover for financial institutions is “total net income before impairment and operating expenses, but including net interest income, net fees and commissions income, net trading income, and other operating income.” Alternatives such as reductions in new loan activity, deposit volumes or new customers may also be relevant but should not be taken into account in isolation.
Additional guidance on the monthly eligibility reviews
Employers are obliged to undertake a review on the last day of every month (except for July 2020 and the last month of the scheme) to be satisfied whether they can continue to meet the eligibility criteria. They should take the necessary action to withdraw from the scheme if they do not meet the criteria. The review must be taken on a rolling basis and the updated guidance includes the following useful table to illustrate how the review should be carried out in practice.
|Actual results (A)||Projections (B)|
|31 August 2020||July & August 2020||September to December 2020|
|30 September 2020||July, August & September 2020||October, November & December 2020|
|31 October 2020||July to October 2020||November & December 2020|
|30 November 2020||July to November 2020||December 2020|
|31 December 2020||July to December 2020||N/A|
|31 January 2021|
|28 February 2021|
Revenue advises that it expects that employers will retain evidence of, appropriate documentation, including copies of projections, to demonstrate continued eligibility over the specified period. It is reasonably expected that the assumptions which underpin the projections will be reliable, will reflect the operating conditions of the business, and will remain materially unchanged.
However, it is noted that “Revenue appreciates that in exceptional circumstances, certain unforeseen events may occur which require the employer to revise the original budget estimate e.g. imposition of further Government restrictions (post the review date) impacting trade, receipt of an unexpected donation, entering into a significant new sales contract, etc.”
Updates to July/August sweepback process
Under the EWSS, eligible employees include new entities, seasonal employees and new hires. In limited circumstances, an employer can backdate a claim for EWSS to 1 July 2020 (if the employer was not eligible for the TWSS or the employer had employees not eligible for the TWSS). The updated guidelines now include detailed steps on how this will operate in practice.
In January and April 2021, Revenue will publish on the Revenue website the names and addresses of employers who availed of the EWSS.
A number of other updates have been included in relation to the guidelines for processing EWSS payments through payroll.
Revenue’s most recent guidance on the EWSS is available here.