The Government is considering extending the wage subsidy scheme until next April as one of a number of measures aimed at rebooting the economy.
The scheme would also be extended to people who are currently unemployed and seasonal workers under plans still being discussed by ministers. However, the State's contribution to the scheme will be reduced to ensure it can be extended into the new year.
The proposal is central to the Government's much anticipated July Stimulus Package, which will contain a raft of measures aimed at creating employment.
Extending and expanding the wage subsidy scheme is seen as a crucial element of the package, which will be announced next week.
The extension of the scheme will give peace of mind to thousands of employers who relied on the Government support to keep staff employed throughout the pandemic.
Under the current scheme, the Government will pay up to 85pc of an employee's wage if they are earning less than €412 a week.
It will pay 75pc for anyone earning between €500 and €586 per week.
The percentage paid by the State is expected to be reduced when the Government unveils a reformed version of the scheme.
A powerful Cabinet sub-committee met yesterday to discuss a range of proposals put forward by ministers.
The committee is made up of Taoiseach Micheál Martin, Tánaiste Leo Varadkar, Finance Minister Paschal Donohoe, and Public Expenditure Minister Michael McGrath.
Social Protection Minister Heather Humphreys also attended as significant decisions are due to be made on the pandemic unemployment payment.
The stimulus package will also have a major focus on expanding the number of apprentices available to seek work which is being worked on by Higher Education Minister Simon Harris. Climate Change Minister Eamon Ryan is developing a retrofitting scheme which will provide employment and assist the Government in reaching carbon emission targets.
Cabinet ministers were asked to provide the sub-committee with ideas by Monday and they were discussed last night ahead of the publication of the plan early next week.
Mr Varadkar has indicated there may be changes to VAT to support small businesses and encourage people to spend money.
The Enterprise Minister will also be expanding State funding for employers affected by the Covid-19 pandemic.
Meanwhile, the Labour Party will today unveil their alternative stimulus package.
Labour will call for all core welfare rates to be increased by €10 a week and for the standard rate of VAT to be reduced from 23pc to 21pc.
They are also proposing the introduction of a short-time working scheme that would eventually replace the Temporary Wage Subsidy Scheme.
Labour's finance spokesperson Ged Nash said the fall-out from the coronavirus pandemic required "strong Government action to help hundreds of thousands of people get back to work".
"The Government's July Stimulus Package and the subsequent National Economic Plan and Budget 2021 will be crucial to set out a new direction for our economy," he said.
"They will show how committed the Government really is to creating decent jobs and maintaining people's living standards," he added.