NOTE: The blog below has become outdated. To get the most up to date information on CEWS please read this blog instead: The Canada Emergency Wage Subsidy: Helping Employers Keep Employees
On April 8, 2020 the federal government announced additional guidance on the eligibility criteria for businesses to access the Canada Emergency Wage Subsidy (“CEWS”). An initial outline of CEWS can be found in our previous blog, here.
100% Refund for Employer-Paid Contributions
Employers eligible for the CEWS will receive a 100% refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan. This incentivizes employers to provide employees with a paid leave where there is no work available. Specific details include:
- Employers will receive a 100% refund for employer-paid contributions for each week where an employee is:
- on leave with pay; and
- the employer is eligible to claim the CEWS for that employee.
- An employee is considered on leave with pay if that employee is remunerated by the employer for that week but does not perform any work for the employer in that week.
- This refund will not be calculated towards the weekly maximum benefit of $847 per employee that an employer can receive.
- There is no limit on the amount of refund an eligible employer may claim under this program.
Flexibility in Calculating Loss of Revenue
Additional flexibilities in calculating revenue have been added mainly to address non-profit organizations and registered charities, high-growth companies and new businesses:
- To calculate revenue loss, all employers now have two options:
- Compare their revenue of March, April, and May 2020 to that of the same month of 2019; or
- Compare their revenue of March, April, and May 2020 to an average of their revenue earned in January and February 2020.
- Once an approach has been chosen, the employer has to follow the same approach for the entire duration of the program.
- For the month of March, the eligibility requirement has been eased. For March only, an employer must suffer a drop in revenue of at least 15%, compared to 30% for April and May.
- Employers are now allowed to measure revenues either on the basis of accrual accounting (as they are earned), or cash accounting (as they are received).
- Further guidance with respect to special rules for corporate groups, non-arm`s length entities and joint ventures will be provided in the following days.
- Non-profit organizations and charities are allowed to choose to include or exclude government funding in their revenues when calculating revenue reduction.
- Once they choose whether to include or exclude government funding, these organizations will have to apply the same method throughout the program period.
Eligibility for employees has been clarified. An eligible employee is an individual who is employed in Canada and has not been without remuneration for more than 14 consecutive days from March 15 to April 11, April 12 to May 9, and from May 10 to June 6, 2020.
- This rule replaces the previously announced restriction related to the Canadian Emergency Response Benefit. Now, an employer can claim the CEWS for remuneration paid in a week in which the employee is eligible for the Canadian Emergency Response Benefit.
Subsidy Limits for Non-Arm`s Length Employees
- A special rule applies to employees that do not deal at arm`s length with the employer. For such employees, the subsidy will be limited to the amount paid by an eligible employer to an employee between March 15 and June 6, 2020 in an amount equal to the lesser of:
- $847 per week; or
- 75% of the employee`s pre-crisis weekly remuneration.
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Lawson Lundell's Labour and Employment Law Blog provides updates on the most recent legal developments impacting the Canadian workplace and offers practical tips for employers. We cover a range of topics, including labour relations, employment law, collective bargaining, human rights, employment standards, employment equity, workers' compensation, business immigration, privacy, occupational health and safety and pensions and employee benefits.