On April 11, 2020, the Federal Government held an emergency session of Parliament to pass the COVID-19 Emergency Response Act, No 2 (“Bill C-14”). This legislation brings into law the Canada Emergency Wage Subsidy (“CEWS”) program announced on March 27, 2020 as part of Canada’s COVID-19 Economic Response Plan.

Since our last article on government aid for employers and individuals, a number of amendments have been made to the CEWS to encourage employers to re-hire workers previously laid off as a result of COVID-19.

Please note the following amendments which have come into effect, current as of April 15, 2020:

1. Canada Emergency Wage Subsidy (CEWS) (received Royal Assent on April 11, 2020)

  • This per-employee subsidy provides up to 75% of employee salaries and wages (up to a maximum benefit of $847 per week) to qualifying businesses, for up to 12 weeks, retroactive to March 15, 2020.

Eligibility

  • The subsidy is available to individuals, taxable corporations, partnerships of eligible employers, registered charities and not-for-profit organizations.
  • Public bodies (e.g. municipalities, local governments, Crown corporations, public universities, colleges, schools, hospitals) are not eligible.
  • The employer must have suffered at least a 15% decline in revenue in March 2020 and 30% for April and May, as a result of the coronavirus pandemic. Employers must be able to attest to the decline in revenue.

Calculating Revenues

  • Revenue from business carried on in Canada from arm’s length sources, using the employer’s normal accounting method, is considered.
  • Employers are allowed to calculate their revenues using the accrual method or the cash method, but not a combination of both. The same accounting method needs to be used for the duration of the program.
  • For registered charities and non-profit organizations, the calculation will include most forms of revenue, excluding revenues from non-arm’s length persons. Organizations can choose whether or not to include revenue from government sources as part of the calculations.
  • To provide more flexibility, employers now have 2 ways to calculate their change in revenue:
    • Option 1: Change in monthly revenues, year over year, for the calendar month in which the period began; OR
    • Option 2: Compare revenue against an average of revenue earned in January and February 2020.
  • Employers are to select one of these approaches when first applying and then use the same approach for the duration of the program.
  • Once an employer is found eligible for a specific period, they will automatically qualify for the next period.

Eligibility Periods

Claiming PeriodRequired reduction in revenueReference Period for Eligibility
Period 1March 15 – April 1115%

March 2020 over:

  • March 2019 or
  • Average of January and February 2020
Period 2April 12 – May 930%

Eligible for Period 1 OR

April 2020 over:

  • April 2019 or
  • Average of January and February 2020
Period 3May 10 – June 630%

Eligible for Period 2 OR

May 2020 over:

  • May 2019 or
  • Average of January and February 2020

Amount of Subsidy

  • The subsidy is based on eligible employee remuneration paid between March 15 and June 6, 2020 and is the greater of:
    • 75% of an employee’s wages paid, up to a maximum benefit of $847 per week; and,
    • the amount of remuneration paid, up to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration, whichever is less.
  • Pre-crisis weekly remuneration for an employee would be the average weekly remuneration paid between January 1 and March 15, 2020, inclusively, excluding any 7-day periods in which the employee did not receive remuneration.
  • For new employees, employers are eligible for a subsidy of up to 75% of salaries and wages paid.
  • Employers must make their best effort to top-up employees’ salaries to bring them to pre-crisis levels.
  • Special rules apply to employees who do not deal at arm’s length with the employer.
  • There is no overall limit on the subsidy amount that an eligible employer can claim.
  • Any wage subsidy received would be considered government assistance and be included in the employer’s taxable income.

Refund for Payroll Contributions (new)

  • The CEWS will provide a 100% refund of employer-paid contributions to EI and CPP/QPP for eligible employees for each week throughout which those employees are on leave with pay and for which the employer is eligible to claim the CEWS.
  • An employee is considered on leave with pay if they are paid by the employer for that week but do not perform any work for the employer during that week.
  • The refund is not available for eligible employees who are on leave with pay for only a portion of the week.
  • Employers would still need to collect and remit employer and employee contributions to EI and CPP as usual, and would apply for the refund when they apply for the CEWS.

How to Apply

  • Apply through your CRA My Business Account portal.
  • The application process will be made available soon.
  • Payments can expect to be received within 6 weeks after submission.

Some Other Notes

  • Rehiring Laid Off Employees – Employers are encouraged to rehire laid off employees as quickly as possible and to apply for the CEWS if they are eligible. Employers can use the CEWS to bring back employees and then place them on a paid leave of absence if there is no work available.
  • Integration with CERB (amended) – Eligibility for the CEWS will be available to employees except for those who have been without remuneration for 14 or more consecutive days in the eligibility period. This rule replaces the previously-announced restriction regarding the CEWS and CERB. To ensure that CERB applies as intended, the government is considering implementing a way to limit duplication which could include a process to allow rehired employees during the same eligibility period to cancel their CERB claim and repay that amount.
  • Integration with 10% Temporary Wage Subsidy – No new changes have been announced. Employers can be eligible for both the CEWS and the 10% wage subsidy for any period. Any amounts received from the 10% wage subsidy for remuneration paid would reduce the amount available to be claimed under the CEWS for the same period.
  • Integration with EI Work-Sharing – For companies participating in a Work-Sharing Program, EI benefits received by employees during the program will reduce the benefit their employer is entitled to received under the CEWS.

More details on the CEWS can be found here.

 

2. Canada Emergency Response Benefit (CERB) (Received Royal Assent on March 25, 2020; Amendments announced April 15, 2020)

  • The CERB provides a taxable benefit of $2000 every 4 weeks for up to 16 weeks to eligible workers who have lost their income due to COVID-19.
  • On April 15, new eligibility rules were announced to:
    • Allow people to earn up to $1000 per month while collecting the CERB.
    • Extend the CERB to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work because of COVID-19.
    • Extend the CERB to workers who have recently exhausted their EI regular benefits and are unable to find a job because of COVID-19.

How to Apply

  • Applications for CERB can be made online or over the phone.
  • Employees should only apply for the CERB through either Service Canada or the Canada Revenue Agency, not both.
  • If you are applying for the first time, answer the questions under Get Started to determine the service option that best fits your situation.
  • Employees who have signed up for direct deposit will receive payment within 3 business days. Payments by cheque will be received in approximately 10 business days.

Return or Repay CERB

  • You will need to return or repay the CERB if you return to work earlier than expected or you applied for the CERB but later realize you are not eligible.

More details on CERB can be found on here.

Our previous articles on the coronavirus and the workplace can be found here. As always, please feel free to reach out to us if you need any HR help during this uncertain time.

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You Asked, We Delivered

A number of clients have been asking for information on not just federal government programs but also provincial programs and initiatives to support employers and employees. We’ve also been asked repeatedly what the duration of temporary layoff provisions are across Canada. Employers who have placed or are considering placing employees on an agreed-upon temporary layoff want to determine at what point a termination of employment is triggered where termination pay is then owed to the employee.

To help answer these questions, we created this handy chart to summarize provisions in each province, current as of April 15, 2020:

JurisdictionResources & SupportMaximum duration of Temporary Layoff (for non-union employers)
FederalCOVID-19 Economic Response Plan3 months or less unless the employee continues to receive payments from the employer or the employer pays for group benefits/pension or a supplemental unemployment benefit.
British ColumbiaCOVID-19 Provincial Support & Information (including BC Emergency Benefit for Workers of $1000)13 weeks in any period of 20 consecutive weeks
AlbertaSupports for Businesses120 days for layoffs related to COVID-19
SaskatchewanCOVID-19 Information for Businesses and Workers12 weeks in a 16-week period
ManitobaSupports for Businesses and IndividualsNormally 8 weeks in a 16 week period, but from March 1, 2020 until the state of emergency ends, there is an exemption to the 8 weeks
OntarioSupport for People, Workers and Businesses13 weeks in any period of 20 consecutive weeks; OR
35 weeks in any period 52 consecutive weeks under specific circumstances
QuebecFlexibility Measures for Employers and Workers6 months
Nova ScotiaSupport for Nova Scotians and BusinessesEmployer is obligated to provide the same notice for layoffs as they would if they were to terminate employment; however, notice does not apply if layoff is due to reasons beyond the control of the employer
New BrunswickCOVID-19 Guidance for BusinessesEmployer is obligated to provide the same notice for layoffs as they would if they were to terminate employment.
Newfoundland & LabradorResources13 weeks in a period of 20 consecutive weeks
Prince Edward IslandCOVID-19 Support for BusinessesEmployer is obligated to provide the same notice for layoffs as they would if they were to terminate employment except if the employee is laid off for reasons beyond the control of the employer.
YukonCOVID-19 Support for Yukoners13 weeks in a period of 20 consecutive weeks; however the employer can apply to extend the period of temporary layoff
Northwest TerritoriesCOVID-19 Information for Businesses45 days during a period of 60 consecutive days; however, this period may be extended under certain circumstances
NunavutLatest News and Updates45 days during a period of 60 consecutive days; however, this period may be extended under certain circumstances

 

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