The Government of Canada is implementing economic relief programs dedicated to helping employers reduce the burden of the cost of retaining employees and to help employees receive income during COVID-19. These measures include a 75% wage subsidy, a 10% temporary wage subsidy and the extension of a work-sharing program. The following provides a brief summary of these government programs, including details relating to eligibility, how to apply and general terms and conditions, as applicable. We will endeavour to update this page on a daily basis. However, for a complete and up to date description, please see the link to the applicable program webpage contained herein. Should you have any questions, please feel free to reach out to a Goodmans lawyer. Programs include:
Canada Emergency Wage Subsidy "CEWS".
- The CEWS provides employers who have seen a drop in revenue due to COVID-19 with a government subsidy that covers a portion of employee wages, retroactive to March 15, 2020. The subsidy intends to allow employers to re-hire employees, prevent further job losses and ease the transition to normal operations.
- While the CEWS was initially only available for a period of 12 weeks (March 15 to June 6, 2020), the government extended coverage until June 2021 in response to the persistent financial pressures faced by employers. An employer that seeks to claim the wage subsidy must examine the relevant claim periods to determine its eligibility as the rules have substantially changed since the program’s inception.
To be eligible to receive the CEWS, an employer must:
- be an eligible employer
- have had a Canadian Revenue Agency (“CRA”) payroll account in existence on March 15, 2020 or if the employer did not have a payroll account on March 15, 2020, it may still qualify if:
- another person or partnership made remittances on its behalf; or
- it purchased all (or almost all) of another person’s or partnership’s business assets.
- have experienced a reduction in revenue. The qualifying revenue decline varies depending on the claim period.
For claim periods 1 to 4 (March 15 to July 4, 2020), the qualifying revenue decline for employers is as follows:
- Employers must meet a minimum of 15% (period 1) or 30% (periods 2 to 4) revenue drop to qualify for the subsidy.
- An employer that qualifies for one period automatically qualifies for the next period.
- The subsidy rate is 75% of eligible employees’ remuneration, up to a maximum of $847/week per eligible employee.
- Employees who were unpaid for 14 or more consecutive days in the period are not included in the calculation.
For claim periods 5 to 16 (July 5, 2020 to June 5, 2021), the qualifying revenue decline for employers is as follows:
- There is no minimum revenue drop required to qualify. The rate an employer’s revenue has dropped is used only to calculate the amount of subsidy it receives for these periods.
- If an employer’s drop in revenue is less than 30%, they are still eligible and can continue receiving the subsidy as employees return to work and their revenue recovers.
- Employees who were unpaid for 14 or more days can, unlike for claim periods 1 to 4, be included in the employer’s calculation.
- Employers can use either the current period’s revenue drop or the revenue drop in a previous claim period (whichever works in their favour).
- For periods 5 and 6, the subsidy rate will be at least 75% for those employers whose revenue dropped at least 30% up to a maximum of $847/week per eligible employee
The maximum base subsidy rate is 60% in claim periods 5 and 6. This rate will decline in claim period 7, and it will eventually reach 20% in period 9.
More information on eligibility criteria can be found here.
How to Apply
To apply for the CEWS, employers should submit an application through their CRA “My Business Account” portal. Alternatively, if a representative is completing an application on their behalf, the representative should do so via the CRA “Represent a Client” portal. If neither of the above is an option, the employer should complete the CRA Web Form application.
The WS program is a three-party agreement involving employers, employees and The Government of Canada, whereby the employee, or group of employees (called a “WS Unit”) agrees to a reduced work schedule over a specified time period (up to 76 weeks) due to a temporary reduction in the normal level of business activity that is beyond the employer’s control. The Government of Canada then provides Employment Insurance benefits to the eligible employees who have singed on to the program. Employers can end their Work-Sharing agreement at any time.
The program is effective March 15, 2020 to September 26, 2021.
To be eligible for the WS program under the temporary special measures, employers must:
- have been in business in Canada year-round for at least two years;
- be a private business, a publicly held company, a Government Business Enterprise or not-for-profit employer;
- have at least 2 employees in the WS Unit
In addition, to be eligible for a WS agreement, an employer’s employees must:
- be year-round, permanent, full-time or part-time employees needed to carry out the day-to-day functions of usual business activity;
- Eligibility has been extended to employees considered essential to the recovery and viability of the business (such as outside sales agents and technical employees engaged in product development).
- be eligible to receive EI benefits; and
- agree to a reduction of their normal working hours in order to share the available work.
How to Apply
Details regarding the application process can be found here.
Note: A formal application for the WS program must be received by Service Canada at least 10 business days in advance of the requested start date. WS agreements must begin on Sundays to align with the EI payment cycle. Prior to COVID-19, employers were asked to submit their applications at least 30 calendar days before the start date.
The 10% Temporary Wage Subsidy for Employers is a three-month measure that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the CRA.
The subsidy is equal to 10% of the remuneration an employer pays to an employee from March 18, 2020 to June 19, 2020 (up to a maximum of $1,375 for each employee and $25,000 per employer)
Employers are eligible to receive the temporary wage subsidy if they:
- are an eligible entity;
- have a CRA payroll program account as of March 18, 2020; and
- paid salary, wages, bonuses, or other remuneration (including tax-exempt remuneration) to an eligible employee from March 18 to June 19, 2020.
How to Apply
- Employers do not need to apply for the TWS.
- Instead, employers should calculate the amount of subsidy they are eligible for and reduce their payroll remittance of federal, provincial, or territorial income tax sent to the CRA accordingly.
- Note: An employer that is ineligible to receive the CEWS may be eligible for TWS. For employers that are eligible for both the CEWS and the TWS for any given period, any benefit from the TWS for remuneration paid in a specific period will generally reduce the amount available to be claimed under the CEWS in that same period.