Update on Federal Government’s Worker Benefits and Employer Wage Subsidy
Canada Emergency Response Benefit (“CERB”)
Further to our newsletter on March 19, 2020, the Federal government announced details of the benefits available for all Canadian workers impacted by COVID-19, including contract workers and self-employed individuals who would not otherwise be eligible for Employment Insurance (“EI”). The Federal government merged the previously announced Emergency Care Benefits and Emergency Support Benefits into the CERB whereby the government will provide a taxable benefit of $500 per week for up to 16 weeks. Eligibility requirements are the following:
- The worker must have stopped working because of COVID-19;
- The reasons include but are not limited to: being let go or having hours reduced to zero; being in quarantine or sick due to COVID-19; being away from work to take care of others because they are in quarantine, sick due to COVID-19; or being away from work to take care of children or other dependents whose care facility is closed due to COVID-19.
- The worker expects to be or is without employment income (including paid leave income, self-employment income and EI benefits) for at least 14 consecutive days in the initial four-week period. For subsequent benefit periods, they expect to have no employment income.
- The worker must reside in Canada and is at least 15 years of age; and
- The worker had at least $5,000 of income in 2019 or in the 12 months prior to the application.
- The $5,000 can be any combination of the following income sources: employment; self-employment; maternity and parental benefits under the EI program and/or similar benefits paid in Quebec under the Quebec Parental Insurance Plan.
Workers eligible for EI regular of sickness benefits can apply for the CERB. However, they cannot be in receipt of EI benefits for the same period of time as the CERB payments.
- If the worker is already receiving EI regular benefits, they continue to receive these benefits until the end of their benefit period;
- If the worker is eligible to EI benefits that started before March 15, 2020, and these benefits end before October 3, 2020, can then apply for CERB.
The portal for accessing the CERB will launch on April 6, 2020 and a worker can apply for the benefit retroactively to March 15, 2020. Benefits will start within 10 days of submitting an application, with no waiting period.
Canada Emergency Wage Subsidy (“CEWS”)
The Federal government also announced the CEWS, a new wage subsidy for employers. The CEWS is a 75% wage subsidy for qualifying businesses for up to three months, retroactive to March 15, 2020 and going until June 6, 2020. The subsidy amount is 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 75% of the employee’s pre-crisis weekly remuneration, whichever is less.
Eligible employers include: individuals, taxable corporations, and partnerships consisting of eligible employers as well as non‑profit organizations and registered charities. Public bodies are not eligible.
In order to qualify, the business must have suffered a 30% or greater decline in revenue due to the COVID-19 pandemic. Revenues will be calculated by determining the change in the employer’s monthly revenues, year-over-year, for the calendar month in which the period began.
Employers are expected, where possible, to maintain existing employees’ pre-crisis employment earnings. Fine or penalties may apply for false or fraudulent claims.
How does this interact with the CERB and the 10% wage subsidy?
- Employers cannot claim the CEWS for remuneration paid to an employee in a week that falls within the 4-week period that the employee is eligible for the CERB;
- Employers can be eligible for both the CEWS and the previously announced temporary 10% wage subsidy. If eligible for both, any benefit from the 10% wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the CEWS in that same period.
Options for Employers to Assist their Employees Without Impacting Employees’ EI Benefits
Employers have many hard choices to make during this time, including how to support their workers without impacting their ability to take advantage of government relief. We have outlined two possibilities for employers to consider in financially supporting their employees who are working reduced hours or are temporarily laid off because of COVID-19 without impacting the employee’s EI payments:
Supplemental Unemployment Benefit Program (or SUB plans)
This is a Service Canada registered plan whereby the employer tops up an employee’s EI benefits during a period of unemployment due to (1) temporary stoppage of work (2) training or (3) illness, injury or quarantine. The SUB plan’s top up payments combined with EI payments cannot exceed 95% of the employee’s normal weekly earnings. The SUB plan application process generally entails submission of a registration form and plan document and takes roughly seven days to process.
Federal Work-Sharing Program
This is a program where a minimum of two employees agree to a reduced work schedule for a specified period of time with their employer and Service Canada. During this period of time, workers can also collect EI benefits. Work-Sharing agreements must include a reduction in work activity of the employees’ regular work schedule between a minimum of 10% (one half day) and a maximum of 60% (three days) in a weekly basis. There are employer and employee requirements to qualify for this program. An application must be submitted a minimum of 30 days prior to the requested start date.
The Federal Government extended the maximum duration of the Work-Sharing Program from 38 weeks to 76 weeks.
If you have questions or concerns about any of the above, the lawyers at Heeney Vokey LLP are working hard to gather the most up to date information to better serve clients in a timely and effective manner.