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Staying Employed During COVID-19: Overview of the government resources available to employers and employees to preserve jobs during the pandemic

4 17 2020

We recently posted about the new Canada Emergency Wage Subsidy (the “CEW Subsidy”) and how the program helps employers keep employees on payroll. This article provides a summary of other government programs aimed at preserving jobs.

  1. The CEW Subsidy

Eligible employers would receive 75% of wages earned by the employee, up to a maximum of $847 per week, per employee.

In addition, employers could also obtain 100% refund for employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan.

For more information on this program, please see our blog post on the top 5 things you need to know about the Canada Emergency Wage Subsidy

  1. 10% Temporary Wage Subsidy

This program is separate from the CEW Subsidy. The 10% Temporary Wage Subsidy is a temporary three-month measure in effect between March 18, 2020 and June 19, 2020 that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the CRA. Note that the amount an employer receives under the 10% Temporary Wage Subsidy would reduce the amount the employer would otherwise be entitled to receive under the CEW Subsidy.

An employer need not apply to obtain the 10% Temporary Wage Subsidy. The subsidy is calculated by the employer when the employer remits the payroll deductions to CRA. Note that the employer cannot reduce their remittance of CPP contributions or EI premiums. However, under the CEW Subsidy, the employer may be able to obtain full refund for some taxable benefits.

Eligible employers for the program are individuals, partnerships, non-profit organizations, registered charities, or Canadian-controlled private corporations (CCPCs). Note that for the CEW Subsidy, all taxable corporations are eligible, not just CCPCs.

Eligible employers for the 10% Temporary Wage Subsidy must also have an existing business number and payroll program account with CRA on March 18, 2020.

Eligible employees for the 10% Temporary Wage Subsidy are individuals who are employed in Canada, similar to the requirement for the CEW Subsidy.

The amount of the subsidy is up to a maximum of $1,375 for each eligible employee up to a maximum of $25,000 per employer between March 18, 2020 and June 19, 2020. By contrast, the CEW Subsidy has a maximum benefit of $847 per week per employee, but no maximum amount that an employer may claim in total.

For more information on the program, please visit this government page: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html#h1

  1. Work-Sharing Program

The work-sharing program is aimed at avoiding layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. The program allows the employee to receive Employment Insurance benefits while working reduced hours. Note that any Employment Insurance benefits received by the employee would reduce any amounts the employer may receive under the CEW Subsidy.

Note that both the employer and employee must agree to the work-sharing program, evidenced by a signed work-sharing agreement, and apply to the program together. A minimum of 2 employees is required for a work-sharing agreement, and there must be a reduction of hours of at least 10% and at most 60%.

The government has extended the maximum duration of a work-sharing agreement from 38 weeks to 76 weeks effective March 15, 2020 during COVID-19.

Who is eligible for the work-sharing program?

Eligible employers must meet the following four requirements:

  1. Be a publicly-held company, private business, or not-for-profit organization;
  2. Be in a year-round business in Canada for at least 1 year (note that previously it had been 2 years);
  3. Demonstrate a recent decrease in business activity of approximately 10%;
  4. Demonstrate that the work shortage is temporary and beyond their control (for example, it is not due to seasonal changes, labor dispute, or because of an increase in work force).

Eligible employees are:

  1. ‘core employees’ – permanent, year round, full time or permanent employees who are required to carry out the everyday functions of normal business activity. Temporary employees who are not seasonal, and have maintained hours similar to permanent full-time or part-time employees within the last 12 months would also qualify;
  2. Employees considered essential to the recovery and viability of the business;
  3. Eligible to receive Employment Insurance benefits (presumed eligible unless they are told otherwise by an Employment Insurance official);
  4. Employees that had been laid off prior to the employer entering the Work-Sharing agreement may be included in the program and rehired;
  5. Agree to a reduction of their normal working hours in order to share the available work.

How do I apply?

Your application must be submitted at least 10 calendar days prior to the requested start date of the work-sharing.

For B.C. businesses, employers can apply to the program by completing and emailing two forms: (1) Application for a Work-Sharing Agreement, and (2) Attachment A: Work-Sharing Unit Form, to [email protected].

Note that previously, a recovery plan on how the employees would return to normal working hours was required. During COVID-19, this requirement has been replaced by a single line of text within the application form.

For more information, please visit these government pages:

  1. The Supplemental Unemployment Benefit Program (the “SUB Plan”)

If the employee is unemployed due to a temporary stoppage of work, training, illness, injury, or quarantine, the employer may use a SUB plan to top up an employee’s EI benefits (up to a maximum of 95% of the employee’s weekly earnings).

Payments from SUB Plans that are registered with Service Canada are not considered as earnings and are not deducted from EI benefits.

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For more information about these government programs or to see how we can help you navigate the complex legal issues arising from COVID-19, please contact Jordanna Cytrynbaum.

For more information on the SUB Plan, including a sample plan, please see the Government page here: https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/ei-employers-supplemental-unemployment-benefit.html

 

 

 

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