Government U-turn to include business owners in wage subsidy scheme

4 Aug 2020445 Views

Image: © chokniti/Stock.adobe.com

After SMEs raised concerns about the exclusion of proprietary directors from the Employee Wage Subsidy Scheme, the Department of Finance plans to revise this decision.

As part of the July jobs stimulus plan, the Government revealed what would happen to the Temporary Wage Subsidy Scheme (TWSS) as the economy begins to reopen. Introduced in March, TWSS was a scheme administered by the Revenue Commissioners with the goal of maintaining employment by supporting eligible employers and enabling them to pay staff through a Government wage subsidy.

The scheme was originally only supposed to last for 12 weeks, but was extended until the end of August back in June. From the beginning of September, a new Employment Wage Subsidy Scheme (EWSS) will be introduced to replace the TWSS.

Concerns from SMEs

At present, there are around 390,000 employees in Ireland who are being directly supported by the scheme and gross payments to employers under the scheme to date amount to more than €2.3bn. The Government plans to invest a further €2.3bn in the new EWSS over its duration to the end of March 2021.

However, under the new EWSS, business owners raised concerns that company proprietary directors would no longer qualify for a subsidy as they did under the TWSS. In a recent report from Cork newspaper The Echo, one business owner described these scheme changes as “farcical”.

Café owner Richard Jacob said that although he and his wife cook and make coffee like other employees, they would not be able receive EWSS supports as they are directors of the company.

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In response to the concerns raised in the article, Minister for Foreign Affairs Simon Coveney said that the Government was developing a solution.

Minister for Public Expenditure Michael McGrath, TD, added: “I’ve spoken to the Minister for Finance on this. It’s being examined and we’ll try find a solution. I recognise how tough business is now for you and all in your sector.”

Reinstating directors

In an update on Friday (31 July), Minister for Finance Paschal Donohoe, TD, announced that he has asked the Revenue Commissioners to reinstate proprietary directors to the EWSS from 1 September where they meet the objective of the scheme on retaining ordinary employees on payroll.

Donohoe asked his department to review the provision with the Revenue Commissioners this month with the goal of achieving that objective while “protecting the integrity of the EWSS”.

“Over the past 48 hours I have listened to the concerns of certain proprietary directors in relation to provisions of the EWSS,” Donohoe said. “These proprietary directors have been using the Temporary Wage Subsidy Scheme to retain ‘ordinary’ employees in their business over recent months and they would wish to continue to do so under the new EWSS.”

The Department of Finance said that any further changes or guidance from the Revenue Commissioners will come in “good time” before the commencement of the EWSS on 1 September.

Kelly Earley was a journalist with Siliconrepublic.com

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