The Canada Emergency Wage Subsidy Explained
April 30, 2020
The COVID-19 pandemic has introduced a wave of difficulty in the lives of all Canadians. Canada’s economy, and Alberta’s in particular, has been hammered by the loss of income for businesses and a loss of jobs for employees. Earlier this month, the government introduced the Canada Emergency Wage Subsidy (CEWS) as a way to help employers keep people employed through tough times. The government has provided a list of frequently asked questions to explain the program in detail, but we wanted to provide our readers with some of the most important details to be aware of.
What does the CEWS provide?
The CEWS provides employers with subsidies of up to 75% of an employee’s wage in order to keep them employed during the economic downturn. The subsidy has a weekly maximum amount of $847 and is available (retroactively) for 12 weeks, specifically March 15, 2020, to June 6, 2020.
In order to qualify to receive CEWS benefits, an employer must have experienced a 15% drop in revenue during March 2020 as well as a 30% drop in revenue in April and May. This is calculated by comparing revenue from the same period in 2019. However, some employers may not have been operating (or may have been operating in a different fashion) during that period in 2019. If this is the case, then a reduction in revenue can be shown by comparing revenue from each claim period (March, April, and May) to the average revenue earned in both January and February 2020.
It should be noted that the government has also provided a list of what constitutes eligible employers, including the following:
- a corporation (other than a public institution) that is not exempt from tax under Part I of the Income Tax Act (the Act);
- an individual (including a trust);
- a registered charity (other than a public institution);
- a person that is exempt from tax under Part I of the Act (other than a public institution), that is:
- an agricultural organization;
- a board of trade or a chamber of commerce;
- a non-profit corporation for scientific research and experimental development;
- a labour organization or society;
- a benevolent or fraternal benefit society or order; and
- a non-profit organization;
- a partnership, each member of which is a person or partnership described in this list.
Defining an eligible employee
In order for an employer to receive CEWS subsidies to pay an employee, the employee must have been working with pay for the employer for a period of 14 or more consecutive days during a monthly claim period. However, if someone did not qualify during one claim period, they can qualify under another period. In addition, if an employee was let go during a claim period, they can be hired back and paid retroactively through the subsidy.
The Canada Revenue Agency (CRA) has indicated it will be monitoring claims by employers to ensure employers are not taking advantage of the CEWS. They expect employers to maintain adequate books and records to ensure claims are adequate and complete, noting that there would be penalties for non-compliance.
At HMC Lawyers we are continuing to assist our clients through the COVID-19 crisis, including on issues related to employment law. To speak with a member of our Employment Law Team, call 1-800-480-3534 or contact us online.