We are providing updated details for employers concerning the new Canada Emergency Wage Subsidy (CEWS). More information is available here.
This fact sheet also provides a list of considerations for employers and unions regarding CEWS.
How CEWS works:
On April 11, 2020 the government passed Bill C-14 to implement CEWS. Bill C-14 amends the Income Tax Act.
Individuals, taxable corporations, partnerships consisting of eligible employers, non-profit organizations and registered charities that have seen a drop of at least 15% of revenue in March, and 30 % in April and May due to COVID-19 are eligible for a wage subsidy of up to 75% of the total remuneration paid to their employee(s) for a period of up to twelve (12) weeks, retroactive to March 15, 2020 and running until June 6, 2020. Employers may choose to compare their revenue of March, April, and May 2020 either to the same months of 2019, or to an average of their revenue earned in January and February 2020, on either an accrual basis or a cash basis.
This subsidy is capped at a maximum of $847/week/employee.
The program includes salaries and wages paid to new employees.
There is no overall limit on the subsidy amount that an eligible employer may claim.
In applying for the subsidy, employers will be required to attest to their decline in revenue. The government has stated that employers must make their best effort to top-up employees’ salaries to bring them to pre-crisis levels. Employers would have to keep records demonstrating their reductions in revenues and remuneration they paid to employees. New penalties are forthcoming to penalize any abuse of the program.
Eligible employers would be able to apply for CEWS soon (for Period 1: March 15 to April 11) through the Canada Revenue Agency’s My Business Account portal, as well as a web-based application. Employers will be expected to apply separately each month. More details about the application process will be made available shortly.
All businesses should register for direct deposit to ensure money can be sent electronically to avoid delay.
Other benefits
Small businesses can still claim the previously announced 10 per cent wage subsidy even if they haven’t seen a drop in revenue (and are therefore not eligible for the larger CEWS subsidy). The maximum subsidy for that program is $1,375 per employee and $25,000 per employer.
CEWS has been expanded to include a 100% refund for certain employer-paid contributions to Employment Insurance and the Canada Pension Plan made in respect of eligible employees on leave with pay and in respect of which the employer is eligible to claim the CEWS.
Employers may need to consider layoffs if they are not eligible for CEWS. For more information on temporary layoffs see Pink Larkin’s Fact Sheet #3. Laid-off employees may be eligible to access the Canadian Emergency Response Benefit (CERB). For more information on the eligibility requirements for the CERB, see here.
How CEWS interacts with Collective Agreements
CEWS raises important considerations for unions and employers.
While the implementation of CEWS will largely depend on the language of the collective agreement, this factsheet outlines general points to consider. For specific information related to your workplace contact legal counsel.
Unions Should Consider
(1) Generally speaking, employers cannot unilaterally alter wages or other parts of the collective agreement compensation package.
(2) CEWS may engage specific collective agreement provisions and/or statutory rights:
- Duty to consult
- Pay
- Benefits
- Layoffs
- Seniority
- Protected leaves
(3) Whether the Union will need a membership vote regarding proposed changes to the collective agreement.
Employers should Consider
(1) Employers should ensure they meet eligibility requirements for CEWS. There are penalties for misuse of the program, which may include fines or even imprisonment.
(2) The government has recommended that employers re-hire workers previously laid off and to top up the wage subsidy where possible.
(3) However, if it is not possible to top up, Employers should consider the following:
- Collective agreement or employment contract terms:
- Duty to consult
- Pay
- Benefits
- Layoffs
- Seniority
- Protected leaves
- If the workplace is unionized, the Union is the exclusive bargaining agent for all members. An employer cannot come to arrangements regarding terms of employment with individual members.
- Constructive dismissal
Final Note:
The details of the subsidy programs are still developing and information from the federal government is still forthcoming. COVID-19 is an ongoing and developing situation. We recommend you stay alert to new developments and government measures.
Pink Larkin is committed to providing tailored legal advice as you need it. We are always standing by to help you successfully navigate any business dispute that arises during these challenging times. We will be posting updates as they become available.
For further information, contact us at (902) 423-7777, toll-free at 1-800-565-4529, or [email protected].
* This information is not legal advice. The answers to these questions will vary, depending on the circumstances of each case. Consult legal counsel for information and advice relevant to your individual circumstances.