The Canada Emergency Wage Subsidy is designed to encourage small- to medium-sized businesses to retain or rehire employees and avoid layoffs as the pandemic carries on.
“You have some runway to catch your breath as you get restarted,” Prime Minister Justin Trudeau said today during his daily press briefing, referring to business owners. “So please, bring back your workers.”
As we noted in previous blogs, the 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 (those that experienced a revenue decrease of 15 per cent in March or 30 per cent in April and May)—to a maximum of $847 per employee per week. The government has indicated that it may also adjust the 30 per cent revenue decline threshold going forward.
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. The original cost of the Canada Emergency Wage Subsidy program was pegged at $71 billion, but the federal government has yet to provide an updated cost estimate that accounts for the three-month extension.
The Department of Finance announced additional changes and provided further clarification on the program today, including guidelines on determining baseline employee remuneration to provide additional support to seasonal workers and those returning from extended leave:
“[Canada Emergency Wage Subsidy program] rules can lead to unintended outcomes in some situations, such as when employees were on parental, disability, or unpaid leave from January 1 to March 15 of 2020, or when individuals – whether dealing at arm’s length or non-arm’s length with their employer – are employed on a seasonal basis.
To bridge these gaps, the government proposes to amend the CEWS to allow employers to choose one of two periods when calculating the baseline remuneration of their employees. Specifically, employers would be allowed to calculate baseline remuneration for an employee as the average weekly remuneration paid to the employee from January 1 to March 15 of 2020 or, alternatively, as the average weekly remuneration paid to the employee from March 1 to May 31 of 2019, in both cases excluding any period of 7 or more consecutive days without remuneration. Employers would be able to choose which period to use on an employee-by-employee basis. This change is proposed to be retroactive to April 11, 2020, which means that it would apply to the first qualifying period starting March 15, 2020 and subsequent qualifying periods.”
Today’s announcement also proposed legislative changes to extend the program to additional groups including:
- Partnerships with one or more non-eligible members (as long as non-eligible members, taken together, do not hold a majority of the interests in the partnership)
- Indigenous government-owned businesses that are carrying on a business and are tax-exempt
- Registered Canadian amateur athletic associations
- Non-public educational and training institutions
- Private colleges and schools
The government is also proposing to allow amalgamated corporations to use their combined revenue as a benchmark to meet the CEWS revenue-decline test.
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