Yesterday, the federal government announced revised parameters for employers to qualify for the Canada Emergency Wage Subsidy (CEWS). More specifically, in response to growing concerns that a significant number of employers would be excluded from qualifying for CEWS, the government relaxed the prior eligibility requirements as follows:
- For the first eligibility period running from March 15 to April 11, applicants will only be required to demonstrate a 15% decline in revenue, rather than 30%. Businesses can choose to use the months of January or February 2020 as reference periods, rather than the month of March 2019.
- Charities and non-profits will have the option to include or exclude revenue from government sources when calculating loss of revenue.
- The government has further clarified that in calculating revenues, employers would be allowed to use either the accrual method or the cash method, but not a combination of both. Employers would select an accounting method when first applying for the CEWS and would be required to use that method for the entire duration of the program.
- The pre-crisis remuneration for a given employee would be based upon an average weekly remuneration paid between January 1 and March 15 inclusive, excluding any seven-day periods in respect of which the employee did not receive remuneration.
- Employers will also be eligible for a subsidy of up to 75% of salaries and benefits paid to new employees.
The following link to the updated federal government website provides additional information:
Further, the government has also clarified how CEWS interacts with the Work-Sharing Program. It has noted that for employers and employees participating in work sharing, employment insurance (EI) benefits received by employees through the Work-Sharing Program will reduce the benefit that the employer is entitled to receive under CEWS.
The government has also announced temporary changes to the Canada Summer Jobs Program, which will assist employers hiring summer staff and provide young Canadians access to jobs in the not-for-profit, small business and public sectors. These changes include:
- An increase to the wage subsidy, so that private and public sector employers can receive up to 100% of the provincial or territorial minimum hourly wage for each employee.
- An extension to the end date for employment to February 28, 2021.
- Permission for employers to hire staff on a part-time basis.
- Permission for employers to adapt their projects and job activities to support essential services.
We have heard from many clients quite correctly noting that, the federal government notices to Canadian employers have been perhaps, less than clear. This is of particular concern when assisting employers with calculating the real benefit offered by CEWS - the amount of the subsidy.
The key to remember is, the subsidy caps are effectively based upon individual employees. As the government has noted, “the subsidy will cover up to the first $58,700 earned per employee or $847 per week”.
The maximum subsidy available to employers is not $58,700.
$847 per week is equivalent to $44,044 per year, that being approximately 75% of $58,700 (more specifically, $58,725.33). Therefore, the maximum benefit is $44,044.00, and it is only reached once an employee hits $58,725.33 per annum. Where the employee's annual salary is less then $58,725.33 per annum, the maximum benefit will correspondingly, also be less.
The above can be restated as follows: an employee must have an annual salary of $58,725.33 in order for the employer to receive $847/week, which represents 75% of their income (or $44,044 per year). Any amount earned above $58,725.33 is not eligible, since this is effectively the cap. Any amount earned below this, means that less than $847/week will be received for that employee (since the government will subsidize “up to” $847/week, depending on what 75% of the employee’s salary is).
Here is an example at $50,000 per annum. $50,000 x 75% = $37,500. The maximum weekly benefit available with respect to such employee is $37,500 /52 = $721.15.
The annual salary is only offered by the government as a measure to help with calculations, since employers cannot actually receive that much over the subsidy period. The subsidy is currently only offered for a 12-week period ending on June 6, which means the most an employer could receive over that 12-week period is $10,164 per employee, if each employee earns $58,725.33 as an annual salary.
Finally, it is important to remember that the funds are not yet available. Parliament is being recalled in order to pass the legislation. Funding will however be backdated to March 15, once the application process is open through the CRA’s My Business Account portal.
If you have any questions related to your HR response to Covid-19, Hyde HR Law is here to assist you.