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Changes to the Canadian Emergency Wage Subsidy (“CEWS”)

April 9, 2020
by Israel Foulon LLP

Summary

Since our April 7, 2020 E-Bulletin, the federal government has announced important changes to the Canada Emergency Wage Subsidy (CEWS) program (a few key details are listed below):

  • The CEWS would be available to eligible employers that see a decrease of at least 15 per cent of their revenue in March 2020 and 30 per cent for the following eligible months. Previously, a 30% reduction was required for all eligibility periods. In applying for the subsidy, employers will be required to attest to the decline in revenue.
  • The federal government is announcing that all employers would be allowed to calculate their change in revenue using an alternative benchmark to determine their eligibility. Under this alternative approach, employers would be allowed to compare their revenue using an average of their revenue earned in January and February 2020. Importantly, whichever method is chosen (the general year-over-year approach or this alternative approach) when first applying for the CEWS would be required to be used for the entire duration of the program.
  • Eligibility for the CEWS for an employee’s remuneration will be limited to employees that have not been without remuneration for more than 14 consecutive days in the eligibility period, i.e., from March 15 to April 11, from April 12 to May 9, and from May 10 to June 6.
    • This rule replaces the previously announced restriction that an employer would not be eligible to claim the CEWS for remuneration paid to an employee in a week that falls within a 4-week period for which the employee is eligible for the Canadian Emergency Response Benefit.
    • The government is encouraging all eligible employers to rehire employees as quickly as possible and to apply for the Canada Emergency Wage Subsidy if they are eligible. To ensure that the Canada Emergency Response Benefit (CERB) applies as intended, the Government will consider implementing an approach to limit duplication. This could include a process to allow individuals rehired by their employer during the same eligibility period to cancel their CERB claim and repay that amount.
  • The federal government has proposed to expand the CEWS by introducing a new 100 per cent refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan. This refund would cover 100 per cent of employer-paid contributions for eligible employees for each week throughout which those employees are on leave with pay and for which the employer is eligible to claim for the CEWS for those employees.
    • In general, an employee will be considered to be on leave with pay throughout a week if that employee is remunerated by the employer for that week but does not perform any work for the employer in that week.
    • This refund would not be subject to the weekly maximum benefit per employee of $847 that an eligible employer may claim in respect of the CEWS. There would be no overall limit on the refund amount that an eligible employer may claim.

Further details regarding the CEWS can be found by visiting the following website:
https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html

Given the exceptional and unprecedented situation, we expect further developments in the coming hours and days.

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Legal Disclaimer

This article is for informational purposes only and is not intended to provide legal advice, which in all circumstances must be tailored to the specific facts of any problem. You should obtain a proper legal consultation in order to determine how this article applies to your specific situation. Please feel free to contact Israel Foulon LLP to learn more at 416-640-1550.