We wish to serve our northern and western regions to help you navigate through these unprecedented times and build resiliency. For ease of reference, we have compiled a list and summary of assistance programs currently available, for companies considering the use of temporary layoffs due to the impact of the COVID-19 on their business, as well as outlined the general rules and legislation.
Canada Emergency Wage Subsidy
The Canada Emergency Wage Subsidy (CEWS) supports eligible employers impacted by COVID-19 to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA).
This subsidy would be available to eligible employers that see a decrease of at least 15% in revenues for the month of March 2020, and at least 30% decreases in revenues for each of the months of April and May 2020, as compared to those same months for 2019. Alternatively, the decline in March, April and May 2020 revenues can be compared to the average revenues for January and February of 2020. The size of a business does not impact eligibility. Eligible employers include individuals, taxable corporations, partnerships consisting of eligible employers, non-profit organizations, and registered charities. Employers are encouraged to rehire employees as quickly as possible and to apply for the CEWS if they are eligible.
Eligibility for the CEWS of an employee's remuneration is available to employees other than those who have been without remuneration for 14 or more consecutive days in the eligibility periods as outlined above. This rule replaces the previously announced restriction that an employer would not be eligible to claim the CEWS for remuneration paid to an employee in a week that falls within a 4-week period for which the employee is eligible for the Canadian Emergency Response Benefit.
The subsidy amount for a given employee on eligible remuneration paid for the period between March 15 and June 6, 2020 would be the greater of:
- 75% of the amount of remuneration 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 7¬¬5% of the employee’s pre-crisis weekly remuneration, whichever is less.
How to Apply
Eligible employers would be able to apply for the CEWS through the Canada Revenue Agency’s My Business Account portal. Employers will need to keep records demonstrating their reduction in arm’s-length revenues and remuneration paid to employees.
More information on the Canada Emergency Wage Subsidy program including eligible remuneration, refunds for certain payroll contributions, eligible periods, eligible employees, and information on compliance can be found here.
Before you Apply
- Ensure your business details and direct deposit information for your payroll accounts (RP) are up to date to allow for any payments to you to be processed quickly and easily.
- You need to calculate the estimated subsidy for your business by using the calculator set up by CRA to calculate the basic CEWS using the provided spreadsheet.
- If you are expecting a payment of $25 million or more, you will have to get your payment through the large value transfer system (LVTS). Learn more: LVTS registration process.
How to Apply
Eligible employers would be able to apply for the CEWS through the Canada.ca website. The subsidy will be processed at the payroll (RP) account level, so you will have to file a separate application for each RP account.
There are three ways to apply:
- Most businesses may apply using My Business Account.
- Business representatives authorized at Level 2 or 3 may apply using Represent a Client.
- If neither is an option, use the Web Forms application with your web access code.
If you are registered for direct deposit on your payroll account, you can generally expect to receive payment within 10 business days. In some cases, the CRA may need to delay your payment if additional review is required or if CRA needs to contact you. The CEWS is paid by direct deposit or by cheque. If you are not registered for direct deposit, allow for additional time for the cheque to be delivered by mail to the address listed on your payroll account.
More information on the Canada Emergency Wage Subsidy program including eligibility requirements, information on compliance, and how to include the CEWS on your returns can be found here.
Work-Sharing Program
Work-Sharing (WS) is a program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. The measure provides income support to employees eligible for Employment Insurance benefits who work a temporarily reduced work week while their employer recovers. This is an agreement between employers, employees, and the Government of Canada.The employer must submit the application package 10 days before the requested start date. Several conditions must be met which include:
- employees must have similar job duties/descriptions in a work-share unit (WS unit) and all affected employees within the WS unit must agree to reduce their hours of work over a specific period of time by the same percentage and to share the available work;
- the WS unit must reduce hours of work by at least 10% (one half day) to 60% (three days) and can vary from week to week, as long as the average reduction over the course of the agreement is from 10% to 60%; and
- the agreement must be at least 6 consecutive weeks long and can go up to 26 consecutive weeks (with new extensions up to 76 weeks).
Effective as of March 15, 2020 to March 14, 2021, the Government of Canada is introducing temporary special measures:
- The agreement extension maximum as listed above increased from 38 weeks to 76 weeks
- Mandatory cooling off period has been waived for those who have already used the Work-Sharing program so that eligible employers may immediately enter into a new agreement
- Several adjustments to the application form to ensure efficiency
- Reduce the requirement and expand eligibility to employers affected by accepting business who have been in business for only one year rather than two, and eliminate the burden of having to provide sales/production figures at the same time
- Expand eligibility for staff who are essential to recovery, Government Business Enterprises (GBEs), and non-profit organization employers
Eligibility
You are eligible to apply if you are experiencing a downturn in business activity related to the global outbreak of COVID-19. To be eligible for a WS agreement, your business must:
- be a year-round business in Canada for at least one year;
- be a private business or a publicly held company; or
- have at least two employees in the WS unit.
Eligibility was also extended to:
- Government Business Enterprises (GBEs), also referred to as public corporations, and
- not-for-profit employers experiencing a shortage of work due to a reduction of business activity and/or a reduction in revenue levels due to COVID-19
- employees considered essential to the recovery and viability of the business can now be eligible to participate in Work-Sharing (such as technical employees engaged in product development, outside sales agents, marketing agents, etc.)
To be eligible for WS, your employees must:
- be year-round, permanent, full-time, or part-time employees needed to carry out the day-to-day functions of the business (your "core staff"),
- be eligible to receive EI benefits, and
- agree to reduce their normal working hours by the same percentage and to share the available work.
How to Apply
To apply for the Work-Sharing program, employers must submit the following forms to the email addresses listed below based on the area their business is located, or where the maximum of participants are located.
Forms:
Applications for a Work-Sharing Agreement form
Attachment A: Work-Sharing Unit form (EMP5101)
Atlantic Provinces
Email: [email protected]
Quebec
Email: [email protected]
Ontario
Email: [email protected]
Western Canada and Territories
Email: [email protected]
For more information on the Work-Sharing program, employers across Canada may call toll-free 1(800) 357 5693
TTY: 1-855-881-9874
For more information on the Work-Sharing program, please visit here or contact your Crowe MacKay advisor.
Temporary Wage Subsidy for Employers
The 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 Canada Revenue Agency (CRA).
The subsidy is equal to 10% of the remuneration you pay between March 18 and June 20, 2020, up to $1,375 per employee and to a maximum of $25,000 total per employer.
You are an eligible employer if you:
- are a non-profit organization, registered charity, or a Canadian-controlled private corporation (CCPC);
- have an existing business number and payroll program account with the CRA on March 18, 2020; and
- pay salary, wages, bonuses, or other remuneration to an employee.
Note: CCPCs are only eligible for the subsidy if their taxable capital employed in Canada for the preceding taxation year, calculated on an associated group basis, is less than $15 million.
Once you have calculated your subsidy, you can reduce your current remittance of federal, provincial, or territorial income tax that you send to the CRA by the amount of the subsidy. It is important to note that you cannot reduce your remittance of Canada Pension Plan contributions or Employment Insurance premiums.
For more information, please review here or contact your Crowe MacKay advisor.
Supplemental Unemployment Benefit Program
Employers can register for a Supplemental Unemployment Benefit (SUB) plan to top up their employees’ weekly earnings when they are unemployed due to a temporary stoppage of work, training, illness, injury, or quarantine and in receipt of EI benefits.
The SUB Plan is required to be registered prior to being able to supplement employees – the employer must send in an application.
The SUB Plan allows employers to supplement income to employees as a top up to EI benefits up to a maximum of 95% of weekly earnings.
A full overview of the Supplemental Unemployment Benefit Program can be found here.
Temporary Layoffs and Terminations
With the various legislative rules under the provincial employment standards legislation across Canada, we wanted to highlight important information when considering temporary layoffs. The information provided is for non-unionized employers.
Alberta
An employer who wishes to temporarily lay off an employee can do so by providing the employee with a written layoff notice. The notice requirements vary as outlined:
- at least one week prior to the date that the layoff is to begin, if the employee has been employed by the employer for less than two years; or
- at least two weeks prior to the date that the layoff is to begin if the employee has been employed by the employer for two years or more.
Given the recent pandemic, it is important to note that if unforeseeable circumstances prevent an employer from providing the notice in accordance the above, it must be given as soon as is practicable in the circumstances. The layoff notice must include clear guidance that this is a temporary layoff notice, the date the layoff is to commence, and it is recommended that it include a copy of section 62(1) of the Alberta Employment Standards Code and sections 63 and 64, and include any other information provided for in the regulations.
A change has been made to increase the maximum time for temporary layoffs from 60 days to 120 days. This change is retroactive for temporary layoffs related to COVID-19 that occurred on or after March 17. Anything over and above this period is considered to have been terminated and termination pay is payable.
An employer may request an employee to return to work by providing the employee with a recall notice in writing stating when the employee must return to work and provide instruction that the employee must return within seven days of the date of the recall notice. If an employee fails to return to work within seven days of the recall notice, the employee is not entitled to termination pay.
Termination notice is not required if the contract of employment is or has become impossible for the employer to perform by reason of unforeseeable, or unpreventable causes beyond the control of the employer.
For more information, please review here or contact your Crowe MacKay advisor.
British Columbia
A temporary layoff must be agreed upon by the employee, or written within the terms of a contract or agreement before the layoff. If these conditions are met, an employer can temporarily layoff an employee for a maximum of 13 weeks unless the temporary layoff is related to COVID-19. To provide increased flexibility to employers and employees who mutually wish to extend a temporary layoff related to the COVID-19 emergency, British Columbia has extended the maximum length of a temporary layoff from 13 weeks to 16 weeks as of May 4, 2020. An employer is not required to provide statutory notice or termination pay for employees temporarily laid off unless or until the layoff exceeds 16 weeks in a 20-week period of time. If the lay off period exceeds those that are set out above, it would be considered a termination of employment. The date of termination would therefore be the first day of the temporary layoff period. Entitlements owing to the employee should be calculated based on this date. If none of the above apply (for example, no agreement or no contract for layoff) and you reduce an employee's hours by 50% or more, this could be considered a termination of employment.
If an employee is laid off, they're still considered to be employed and therefore any benefits and entitlements (including vacation and leaves of absence) are protected.
An employer is not required to statutory termination pay in a situation where the contract is “impossible to perform due to an unforeseeable event or circumstance other than receivership, action under section 427 of the Bank Act (Canada) or a proceeding under an insolvency Act.”
For more information, please review further details here or contact your Crowe MacKay advisor.
Northwest Territories
An employer who wishes to temporarily lay off an employee is required to give the employee written notice, which must indicate the expected date on which the employer will request the employee to return to work. If notice is not provided, the employer will be deemed to have terminated the employment of the employee and termination pay is payable.
A temporary layoff cannot exceed 45 days during a period of 60 consecutive days. There is a potential to extend a temporary layoff to a period exceeding 45 days if satisfied that special circumstances justify the extension, and that the employee will be recalled.
Should a temporary layoff exceed the 45 days and has not been given any extensions, the employee shall be deemed to have had their employment terminated on the last day of the temporary layoff and the employer is required to pay the employee termination pay.
Saskatchewan
Under normal circumstances, employees must be provided with written notice by an employer who wishes to temporarily layoff an employee and the notice period varies on length of employment. Where no notice is provided, employers must provide pay instead of notice equal to the amount of notice the employee is entitled to. However, Saskatchewan has specific guidance for public emergency layoffs.
As part of an employer’s response to a public emergency during an order of the c=Chief Medical Health Officer, or an emergency declaration by the Government of Saskatchewan, employers can issue layoffs and do not have to provide notice or pay in lieu of notice that will occur for a maximum of 12 weeks in a 16-week period. This measure is in place to allow employees to immediately access supports provided through provincial and federal programs. Employees are still considered employees in this case.
If a layoff exceeds 12 weeks with the 16-week period from the first day of the interruption of work, the employee is not reinstated and pay instead of notice is immediately payable to the employee.
These are minimum standards that may be superseded by an employment contract providing the terms offer at least what is available through employment standards regulations.
For more information, please review here or contact your Crowe MacKay advisor.
Yukon Territory
A temporary layoff means an interruption of an employee’s employment by an employer for a maximum of 13 weeks in a period of 20 consecutive weeks. If an employer temporarily lays off an employee and the layoff exceeds a temporary layoff period as outlined, the employee shall be deemed to have been terminated at the start of the temporary layoff and the employer shall pay the employee termination pay.
A temporary layoff can exceed the periods as outlined above if the Director has fixed a later recall date or unless the Employment Standards Board has ordered an extension of the layoff period or both. If the layoff period expires, the employee is considered to have been terminated at the beginning of the period and pay in lieu of notice must be paid to the employee.
For more information, please review here or contact your Crowe MacKay advisor.
Please note that there are some potential risks that could arise from a temporary layoff where there is no term in an employee’s contract allowing for such, a company policy providing for such, or a past practice at the company of temporary layoffs. For more information, please contact your Crowe MacKay advisor if your company is considering temporary layoffs.
Canada Emergency Response Benefit
Support for individuals facing unemployment should be directed to the Canada Emergency Response Benefit (CERB) which will be accessible through a secure web portal starting April 6. The new Canada Emergency Response Benefit will provide a taxable benefit of $2,000 a month for up to four months to eligible individuals.
Read more on the CERB and application process here.
Please contact your Crowe MacKay advisor for immediate support or additional information while navigating these uncertain times.
Specific professional advice should be obtained prior to the implementation of any suggestion contained in this article. Contact your Crowe MacKay advisor for more information.
