On March 18, 2020, Prime Minister Trudeau announced an $82-billion aid package to assist Canadians with the impacts caused by the COVID-19 crisis. While the details of its implementation are still being written, are subject to change as the crisis develops, and in some instances require Parliamentary approval, employers, employees and contractor workers should be aware of these new proposed measures that may assist in these challenging times. Employers should also take note of the measures to support workers, which can help mitigate the impact of lay-offs and pay cuts.
This article covers current federal initiatives and those in B.C. Readers in other provinces should check for their provincial initiatives.
This Employer Alert may be subject to updating as events, and the law, evolve. Please also refer to our previous post on advice for Employers Managing Risks during the COVID-19 crisis, which will continue to be updated and can be found at the following link: https://www.linkedin.com/pulse/coronavirus-managing-risk-employees-wagestaff-geoffrey-howard/
Small Business Temporary Wage Subsidy
“Small businesses” will be eligible to receive a temporary 10% wage subsidy for 90 days, up to a maximum of $1,375 per employee and $25,000 per employer. Business will receive this benefit by reducing their remittances of income tax withheld from their employees’ pay and otherwise payable to the government.
The government has budgeted $3.8 billion for this measure and advised it can be implemented immediately, with the supporting legislation to follow. For now, eligible businesses have been described as “corporations eligible for the small business deduction [under the Income Tax Act], as well as non-profit organizations and charities.” Employers should stay tuned for further details, including what they will need to show in terms of maintaining jobs, once the legislated is passed. As several commentators have pointed out, a 10% subsidy may not be enough to induce small businesses to defer lay-offs so the level of support may increase.
Streamlining Access to the EI sickness benefit
For employees eligible to claim employment insurance (EI) sickness benefits, which provide up to 15 weeks of income replacement of 55% of weekly earnings up to a maximum of $573/week, the government has now waived:
- The 1 week waiting period to apply to EI for sickness benefits for employees who have been told to self-isolate or quarantine. This waiver will last for a minimum of 6 months; and
- The requirement for a medical certificate e.g. doctor’s note certifying illness, normally required to access EI sickness benefits.
In addition, employees who cannot complete their claim for EI sickness benefits due to quarantine may apply later and have their EI claim backdated to cover the period of delay
Income Support for Workers
Emergency Support Benefit
The government has proposed an Emergency Support Benefit delivered through the Canada Revenue Agency to provide workers who are not eligible for EI sickness benefits, up to $900 bi-weekly or roughly $2,000 per month (almost the same as the maximum EI benefit), for up to 15 weeks. The stated recipients are:
- Workers, including the self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits.
- Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent, but do not quality for EI sickness benefits.
- Parents with children who require care or supervision due to school closures, and are unable to earn employment income, irrespective of whether they qualify for EI or not.
We would assume there will be rules against double dipping under multiple categories and regular EI benefits.
If approved by Parliament, application for this benefit will be available in April, 2020, and those receiving it will have to confirm in writing they remain eligible every 2 weeks to keep receiving benefits. While the proposed budget for this measure is $5 billion, we await further details on long this benefit will be available.
The EI Work Sharing Program
The existing EI Work Sharing Program provides EI benefits to employees who agree with their employers to reduce their normal working hours and wages due to temporary business conditions beyond the control of their employers. Typically, the employees agree to a reduced 3 or 4 day work week and receive EI benefit for the days missed. The government has introduced the following special temporary measures effective March 15, 2020 to March 14, 2021:
- Extension of the maximum duration of Work-Sharing Agreements (WS Agreement) from 38 weeks to 76 weeks, and
- Waiver of the mandatory waiting period so that employers with a recently expired agreement may immediately apply for a new agreement, without waiting between applications and ease Recovery Plan requirements for the duration of the WS agreement.
To be eligible for these temporary measures, you must be experiencing a downturn in business activity related to the global outbreak of COVID-19, and have:
- WS agreements signed between March 15, 2020 and March 14, 2021
- WS agreements that began, or ended between March 15, 2020 and March 14, 2021,
- WS agreements that ended between June 23, 2019, and March 14, 2020 and are in their mandatory cooling-off period
Unfortunately, the government has so far failed to abridge the existing requirement that Work Sharing plans be submitted to EI 30 days before taking effect. This should be temporarily waived given how fast employers need to respond to falling demand and other restrictions on business during this crisis. We expect efforts will be made to expedite approvals so employees can receive EI benefits promptly.
BC Provincial Programmes
On March 23, 2020 the government passed legislation which will, amongst other things, offer a one time $1,000 tax free payment to workers whose ability to work and earn income has been affected by COVID-19. Employer can defer paying Employer Health Tax and extend the time for remitting certain other taxes. Sectoral support programmes may followo but details are not available at this time.
More Coming Soon?
We anticipate other industry or sectors such as airlines, tourism and energy etc. will negotiate for additional specific financial supports. The governments may also increase the extent of its broad supports for small, medium and larger businesses. In addition, some provinces are expected to announce their own economic supports. Commentators have pointed out that the total budget for the Canadian government’s announced supports to date is a fraction, in relative terms, of what other Western nations have announced.
These are only a few of the “workplace’ benefits laid out in Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses. Readers may be eligible for additional business or individual benefits under the Plan, which can be found at this link: https://www.canada.ca/en/department-finance/news/2020/03/canadas-covid-19-economic-response-plan-support-for-canadians-and-businesses.html#Economic_Response_Plan