COVID-19: Temporary Options for Employers & Employees
As you all know, over the last several weeks, as COVID-19 continues to have a significant impact across Canada, many existing options have been revised and new options provided to help employers and employees. Our post on March 19th focused on these options, and today we want to bring you up to speed/provide clarity on further revisions and/or details.
As you review these options, keep in mind that while you cannot combine options for a given employee/group of employees (e.g. top up wage subsidy with a SUB plan), you can use options for different employees/group of employees (e.g. having some on wage subsidy, while some are laid off and collecting the CERB).
While not yet in force legislatively, the Canada Emergency Wage Subsidy program is intended to provide a 75% wage subsidy to eligible employers for up to 12 weeks, and is retroactive to March 15th.
Relevant details on this are as follows:
- In order to be eligible, your business must have seen a drop of at least 30% in revenue for each claim period compared with the same time-period last year (or compared to January & February 2020); for March, this reduction need only be 15%
- Charities and Not-for-Profit organizations can choose whether to include or exclude government funding/subsidies in calculating loss in revenue
- Employers can receive 75% of the “pre-crisis” wage that is actually paid to the employee; i.e. employers must pay the wage and then make the claim for reimbursement
- Each employee would be paid a maximum of $847 per week; remuneration paid does not include severance, stock options, benefit premiums or other perks (TBD whether it includes vacation pay, bonus, commission, etc.)
- The claim period is from March 15th through April 14th, then April 15th through May 14th and May 15th through June 14th in three blocks; you would need to apply each month
- Employees don’t necessarily have to be working full or even part-time, but you need to be paying them their regular/usual pay, including all regular deductions at the “pre-crisis” wage
- Employers are expected to use this subsidy to support the health/well-being of employees and make best efforts to top up this subsidy to 100%; however, employees should not earn more on the wage subsidy than they did pre-pandemic
The Work-Sharing Program allows employers to set up work-sharing agreements for employees with the same or similar job duties – in addition to those who do different work, but whose jobs impact one another. Provided impacted employees agree to take part, it’s an alternative to layoffs where your employees work a reduced schedule, but receive EI benefits for the remaining hours. The EI benefits are calculated as a percentage of hours not worked due to work-sharing. For example, if an employee works 75% of what they normally do (e.g. works 30 hours out of their usual 40), they will receive 25% of their weekly rate based on 55% of earnings (to the EI maximum).
Revised components as a result of current circumstances include:
- Employees who are considered essential to recovery/viability of business can now participate in the program (e.g. executives, sales people)
- The application has been streamlined so that a single application can now be used for more than one work-share “unit” and you no longer have to provide a recovery plan
- Application only needs to be submitted 10 days in advance to proposed start date (formerly, it was 30 days)
- While the minimum duration stays at 6 weeks, businesses affected by COVID-19 can extend the duration for an additional 38 weeks for a total of 76 weeks
Supplemental Unemployment Benefit (SUB) Plan
SUB plans are in place so employers can top up an employee’s employment insurance (EI) benefits due to temporary stoppage of work (e.g. layoff), illness or quarantine. In order for employers to use this option, employees must be in receipt of EI and the plan must be registered and approved prior to the effective date. Under this plan, the maximum amount an employee can receive is 95% of their normal weekly earnings.
Canada Emergency Response Benefit (CERB)
The CERB provides individuals who’ve lost their job or income (temporarily or otherwise) or have had to stop working (e.g. due to sickness, quarantine or needing to provide care) as a result of COVID-19 with income support of $2,000 per month, for up to four months (between March 15th and October 3rd). For those who are eligible, it will be retroactive to March 15th and there is no waiting period for benefits (expected payment within 3 – 5 days of application). Payments are taxable, but not at source.
In order to be eligible, employees must:
- No longer be working due to COVID-19
- Have had an income of at least $5,000 in 2019 or in the 12 months prior to application
- Be or expect to be without income for at least 14 days in a row in the initial 4-week period and expect to have no income for the subsequent 4-week periods
Anyone who has voluntarily quit is not eligible.
The portal launched on April 6th and individuals may apply based on birth month until April 9th and thereafter, can apply any time.
While there’s nothing substantive on this yet, there is a possibility that those who are working reduced hours (e.g. less than 10 hours per week) as a result of COVID-19 or are making less than usual would be eligible for CERB. We expect details to be announced on this in the coming days.
Record of Employment (ROE) Codes
For employers providing ROEs for employees, note that there are new reason codes that have been developed due to COVID-19. They are as follows:
- A00 – Shortage of Work: Temporary closures or decrease in operations (all or part of business)
- D00 – Illness or Injury: COVID-19 quarantine or self-quarantine
- N00 – Leave of Absence: Employee refuses to work or no daycare, but has not quit
Once again, this is a lot of information and we know you are navigating a lot right now, as it continues to evolve and be released. We will continue to provide further details and keep you updated as we know more.