Warehousing

COVID-19: Canada Emergency Wage Subsidy extended beyond June

Warehousing

Prime Minister Justin Trudeau today announced that the Canada Emergency Wage Subsidy—the federal program designed to encourage small to medium-sized employers to rehire or retain employees impacted by the COVID-19 crisis—will be extended beyond the original June 6th end date.

A new proposed expiry date for the program has yet to be tabled, with Ottawa saying that details would follow next week. The news is positive for employers who are currently laying plans to restart or ramp up their businesses in a lower- or no-revenue environment, and whose prospects for growth and a return to balance sheet normalcy remain elusive. In fact, many businesses have yet to feel the full impact of the economic slowdown and could need additional support in the months ahead.

However, even though the extension could encourage some employers to rehire staff sooner, in many cases it won’t be enough to save organizations that have seen their business models upended overnight through no fault of their own. More extensive supports may be required, or we could face a protracted period of unemployment and a far deeper recession than has already been predicted. How we cover the cost of this kind of relief program, while mitigating the risk of long-term fiscal and financial impairment at the federal level, is anyone’s guess at this point.

“We recognize that as the economy starts to re-open, people will be getting back to work, leaving the emergency response benefit and perhaps going on to the wage subsidy as employers bring people back on get them back to work as our economy picks up over the coming weeks and months,” Trudeau said during his daily media briefing, announcing the Canada Emergency Wage Subsidy extension.

“That’s why we will constantly be adjusting to make sure Canadians are getting the support they need as we look to carefully and gradually restarting our economy.”

The $71 billion Canada Emergency Wage Subsidy program provides a subsidy of up to 75 per cent of the first $58,700 earned by employees of qualifying companies—to a maximum of $847 per employee—for up to three months, retroactive to March 15, 2020. Employers that don’t qualify for the 75 per cent wage support can apply for the 10 per cent subsidy for remuneration paid from March 18 to before June 20, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.

As we noted in previous blogs, the Canada Emergency Wage Subsidy has been adjusted and enhanced since first being introduced, with the goal of broadening the package’s impact and supporting a greater number of businesses struggling in the wake of pandemic-driven economic shutdown. Other programs such as the Canada Emergency Response Benefit (CERB) have also been enhanced to extend eligibility to more Canadians.

There is no indication yet as to whether the CERB, which expires in early October, will be extended. But Trudeau did say that announcements on additional sector-specific support programs would follow.

“We will, over the coming days, start looking at specific sectoral supports for various industries that have been hit particularly hard by COVID-19,” he told reporters. “But even then, our focus will be on the workers, on the supply chains that involve many, many small businesses across the country for many of these industries, and not on the corporate well-being of an industry or of a sector.”

As always, if you have questions about this or any other government relief program, please contact a member of our team.

Armando Iannuzzi, Co-Managing Partner

Armando Iannuzzi
Armando Iannuzzi

905-946-1300, x. 239
aiannuzzi@krp.ca