Q&A: How will the new employment wage subsidy scheme work?

The new scheme is the successor to the temporary wage subsidy scheme. File picture.

Q. So what exactly is this new scheme?

A. The Employment Wage Subsidy Scheme, which has undergone a name change from the much less snappy Employment Wage Support Scheme when first launched back in July, is the successor to the Temporary Wage Subsidy Scheme - the signature Revenue support put out for businesses by the Government back in March as it became clear Ireland’s economy was about to get put into stasis, and paid at a rate of up to €410 per week.

Q. First of all, what are the differences? And what are the benefits?

A. At a high level the main difference between the two schemes is the size of the subsidies themselves, which will now be paid at a rate of €151.50 per week for those earning between that amount and €203, and €203 per week for those earning between that figure and €1,462.

A different kind of scheme has been needed for some time for two reasons: 1) to taper off the State support for businesses at a defined end date as to continue to pay so many workers’ wages is unsustainable; and 2) because many sections of the economy are now up and running again, and, in theory, more subtle support is necessary.

The main benefit is naturally that the Government is going to continue to support businesses into the new year, a much-needed fillip with the spectre of the Brexit denouement floating above proceedings.

Another key benefit is that the tax due on the subsidies will be paid in real time, meaning that employees won’t be stuck with a sizable (and probably unexpected) bill at some date in 2021. The new scheme will also allow for the hire of seasonal workers.

Q. What’s it going to cost?

A. About €2.3bn give or take over the course of seven months, ending on March 31 of next year.

Q. So why are business owners up in arms?

A. Because they can’t make head nor tail of the deal and some of its idiosyncrasies. There is a lack of clarity as to what businesses are eligible to apply and what ones aren’t, as you’re supposed to prove your eligibility via a decreased turnover due to Covid, but only since July 1. Similarly, the subsidies themselves are applied for on the 6th of each month by businesses, but then a wait of six weeks or so beckons while the Revenue figures out what payments are due back. It’s not clear why this is the case. And then there’s the issue of Ireland’s 90,000 or so proprietary directors (typically encompassing smaller concerns like publicans), who have yet to be told whether or not they’ll be allowed to pay themselves a wage under the new scheme if they’ve no employees officially listed. Worryingly for those on especially low incomes, no subsidies will be payable at all.

Q. What is Revenue saying?

A. They’re saying that more guidance is to follow next week. Business owners are irritated by the lack of clarity around a scheme that was first announced five weeks ago.