Government U-turn on excluding business owners from wage subsidy
Covid pay support in July stimulus package had expressly excluded proprietary directors
The new subsidy was announced as part of the July Stimulus package last week.
The Government has reversed a decision to exclude proprietary directors from the new Employment Wage Subsidy Scheme (EWSS) after small business owners warned the move would lead to the closure of companies.
Minister for Finance Paschal Donohoe said late on Friday that he had asked Revenue to reinstate directors who retain ordinary employees on their payroll to the scheme and has also asked his department to review the provision.
The U-turn comes after many businesses owners expressed anger at being excluded from the scheme in a move that would effectively leave them without any income.
It also followed commitments from fellow Ministers Michael McGrath and Simon Coveney to find a solution.
The new subsidy, announced as part of the July Stimulus package, will apply from July 31st to the end of March 2021. It runs concurrently with the existing Temporary Wage Subsidy scheme (TWSS) until the end of next month, when that scheme will cease.
Proprietary directors were to be excluded under the new subsidy. The Department of Finance said that, as the owner or co-owner of a company, a proprietary director was considered to be in a position that “is much less likely to be considered a vulnerable employment”.
Earlier on Friday, Mr Donohoe had said he recognised that the exclusion of directors from the scheme was “an issue for some”. But he added that the measures had been put in place to avoid abuse of the scheme, which will cost approximately €2.2 billion to the end of March 2021.
Business owners reacted with fury over the last 48 hours on news that they would be excluded from the new scheme.
Richard and Maireád Jacobs, owners of Cork-based Idaho Cafe, said self-employed people had been “thrown under a bus” by being excluded from the scheme at such a difficult period.
Their comments were echoed by Karl Purdy, owner of CoffeeAngel, who said business owners “don’t expect to be saved by Government. But equally, [they] don’t expect or accept being singled out and assaulted by those who represent us.”
Linda Jones, managing director of the Travel Boutique, had said the original decision would “effectively close all travel agencies down”.
“Travel agencies are only able to keep their staff thanks to the current wage scheme and now business owners won’t even have any income at all as they try to keep their businesses trading,” she said, adding that travel agents had been planning a protest in Dublin next week over the decision.
Isme chief executive Neil McDonnell said business owners were “stressed and annoyed” about the news. “For a lot of small companies, the subsidy is their only form of income at the moment,” he said.