Employers availing of the new Employee Wage Subsidy Scheme will have to wait for up to six weeks to receive payment of payroll subsidies, which they currently receive within 48 hours, the Revenue Commissioners have confirmed.
Employer bodies have warned the delays may trigger business closures and redundancies, as they will place an "unsustainable" burden on cash flow.
At present, employers availing of the Temporary Wage Subsidy Scheme receive their payroll subsidies within 48 hours of submitting payroll data to the Revenue Commissioners, who administer the TWSS.
However, from September 1, the TWSS will be replaced by the Employee Wage Subsidy Scheme.
Under the new EWSS, employers will receive a flat rate subsidy of either €151.50 or €203 per worker - down from around €350 on the TWSS.
Employees earning between €151.50 and €1,462 per week will be eligible, and employers will pay a reduced 0.5% PRSI rate.
However, in future the government subsidy will be paid up to 6 weeks in arrears, placing a new cash flow burden on businesses.
The Revenue Commissioners acknowledged that the delay could be over five weeks for those paid weekly, but said it would be as little as 2 weeks for those paid monthly.
They said the time frame for the payment of subsidies due under the EWSS is tied in with the time frame within which the relevant monthly employer PAYE return is due.
Employer group Ibec warned companies eligible for the wage subsidy scheme would already be experiencing considerable cash flow difficulties.
"A period of up to six weeks following payroll for receipt of the wage subsidy will be unsustainable for many, and Ibec will be asking the Minister to expedite this process," it said.
Chambers Ireland also stressed that cash flow was a very significant concern.
Chief Executive Ian Talbot urged the government to find a methodology to get money to companies more quickly.
ISME Chief Executive Neil McDonnell noted that many businesses availing of the TWSS/EWSS were retaining employees purely because the subsidy was in place, and because there was a temporary embargo on redundancies under the emergency legislation.
He noted that both were subject to change, and could risk "crystalising" a wave of redundancies.
He also noted that Germany is expected to extend its pandemic furlough scheme to 24 months.
Felim Meade who is co-owner of the Stephen's Green Food Village also forecast business closures as a result of the subsidy delays.
He acknowledged that the Temporary Wage Subsidy Scheme was the "absolute driving force" behind reopening his business, which is now operating at 40% below pre-pandemic capacity.
However, he said the new replacement EWSS will be problematic.
"The government is asking us to stay at home, to work from home, and that is dampening demand. On the other side they are cutting our support and asking us to wait six weeks. That will have a huge effect on cash flow, and I am not sure how many businesses have the cash flow to support that," he told RTE.
He accepted that the wage subsidies could not go on forever, and would have to be cut.
However, he said to force employers to pay staff in full and then wait six weeks for reimbursement was too slow for businesses to cope with.
Asked about his own business, he said that with revenue decreasing, and the wage subsidy halved, he could be faced with the prospect of cutting staff or hours - and forecast that unemployment would rise, and businesses woudl close.
The Irish Congress of Trade Unions highlighted positive elements of the new EWSS.
Social Policy Officer Dr Laura Bambrick noted that the scheme ensured there was no "cliff edge" with support disappearing overnight.
She also pointed out that eligible businesses could now claim the wage subsidy for all employees on the payroll earning between €151.50 and €1462 , including new hires and those on higher incomes.
She also said that the scheme had been extended longer than almost all other wage support schemes globally.
She said it was "disingenuous" to say the scheme was less generous without taking these factors into account.
However, she said Congress would be concerned if the payment delays resulted in job losses.
