24 Jul 2020 | 08.06 am
Wage Subsidies Extended To April 2021
But subsidy reduces to flat rate €203 per week from September 1
24 Jul 2020 | 08.06 am
Wage subsidies for employers impacted by the Covid lockdown are being extended to April 2021, the government announced in its July Jobs Stimulus.
However the subsidy rate is to be slashed from September 1 to a flat rate €203 per employee from the current salary-linked maximum rate of €410 per week.
It is anticipated that the reduction will have a severe impact on employers in locked down sectors such as tourism, live entertainment, travel and bars. Rather than deploy more of their own cash or borrowings to maintain staff wages they will start implementing redundancies
Around 63,500 employers have received subsidy payments under the Temporary Wage Subsidy Scheme and c.400,000 employees are currently being directly supported by the scheme.
The TWSS is being replaced in September with a new Employment Wage Support Scheme. Employers qualified for TWSS on condition that they had suffered a 25% decline in turnover this year. With the new EWSS, the bar has been raised to a minimum 30% turnover decline relating to projected H2 2020 vs. actual H2 2019.
Without giving details, the July Jobs Stimulus announcement signalled that EWSS will be payable to seasonal staff and new employees. New firms operating in impacted sectors will also be eligible.
Pandemic Unemployment Payment
The Pandemic Unemployment Payment (PUP) was due to end in August and has been extended to 1 April 2021, though the rate will be tapered in the coming months.
The first cut comes from September 17, when the rate reduces to €300 for people who previously earned over €300 per week, and to €250 for people who previously earned between €200 and €300 per week.
From 1 February 2021 there will be further cuts, with the €300 rate reducing to €250, and the €250 rate reducing to €203.
In mid-July c.300,000 people were being paid PUP, one quarter of them on the new minimum €203 weekly rate that applies to workers with previous earning of under €200 a week.
Commercial Rates Waiver
The government has also announced that, with not-yet-clarified limited exceptions, all businesses will be granted a waiver of commercial rates for the April to September 2020 period. While the waiver is not a cash grant, the estimated saving for business rate payers is sizeable at €600m.
The Restart Grant allows for a cash payment from local authorities to rate payers equivalent to the rates bill of the business in 2019, subject to the minimum and maximum payments of €2,000 and €10,000. There have been c.43,000 applications for the grant and €128m has been paid out to date.
The Restart Grant is limited to companies with turnover under €5m. The Stimulus Plan announced that the grant is being extended to a broader base of SMEs, without explaining what this entails. One clue is that the payment level is being increased to €25,000. Further payments may be available to firms that have already received a grant, the government stated, again without clarification. Some businesses not previously included in the scheme such as B&Bs will now be eligible.
The immediate impact of the announcement has been to stall the scheme. For example, Dublin City Council stated: “Following the announcement on 23rd July 2020, the application form for the Business Restart Grant is temporarily unavailable. Dublin City Council is working to update the application form and make it available again as soon as possible, once the exact details of the changes have been confirmed and the necessary development work completed. We apologise for any inconvenience caused and thank you for your patience during this time.”
In a surprise move, Taoiseach Micheál Martin announced a six-month reduction in the standard rate of VAT from 23% to 21%, effective from the beginning of September 2020. Tourism and hospitality lobby groups had been pleading for action on their 13.5% VAT rate, demanding cuts to 5.0% or zero.
Adrian Cummins, CEO of the Restaurants Association of Ireland, commented: “By not decreasing the Tourism and Hospitality VAT rate today in line with our EU counterparts and closest neighbour, the July Jobs Stimulus has put a nail in the coffin for border restaurant and hospitality businesses competing with 5% rate in Northern Ireland
“I am appealing to the government to rethink this decision and to support independent tourism and hospitality businesses around the country with a targeted grants package.”
Photo: Taoiseach Micheál Martin (centre) with minsters Leo Vardkar (left) and Eamon Ryan. (Pic: RollingNews.ie)