The government has introduced several new resources to help employees and employers who are suffering financial disruption because of COVID-19.
RESOURCES FOR EMPLOYEES
The Government of Canada (Government) has now instituted the Canada Emergency Response Benefit (CERB). All applications for CERB and EI benefits will be processed through the CERB portal.
Under CERB, employees who stop work for reasons related to COVID-19 or who are still working but receiving no income, are entitled to apply to CERB. CERB is a payment of $500 per week for a maximum of 16 weeks. Although no tax is deducted at source, the payment must be included in income in the employee’s tax return. CERB is available both to employees who have been dismissed and to those who have been temporarily laid off. To be eligible for CERB, the employee must:
- be over 15 years old;
- reside in Canada;
- have stopped working, or are still working but have received no income, because of COVID-19 or are eligible for EI benefits
- had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and
- must or expect to be without employment or self-employment income for at least 14 consecutive days in the initial four-week period, and for subsequent benefit periods, the employee must expect to have no employment or self-employment income.
The Government has added revisions to the eligibility rules to:
- allow people to earn up to $1,000 per month while collecting CERB;
- extend CERB to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work as a result of the COVID-19 outbreak
- extend CERB to workers who have recently exhausted their EI regular benefits and are unable to find a job or return to work because of COVID-19.
The eligibility date for CERB is March 15, 2020. More information is available here: https://www.canada.ca/en/services/benefits/ei/cerb-application.html.
B. The B.C. Emergency Benefit for Workers
The B.C. Government will pay a one-time, tax free, $1,000 payment for B.C. residents who are unable to work due to COVID-19. Details have not yet been released.
C. Temporary Layoff: Supplemental Unemployment Benefit
Employers may use a Supplemental Unemployment Benefit (SUB) plan to increase their employees’ weekly earnings when they are on a temporary layoff or a COVID-related leave. If registered with Service Canada, payments are not considered as earnings and are not deducted from EI benefits.
Employers must register the SUB plan with the SUB program in Bathurst, N.B. before its effective date. The SUB plan must:
- identify the group of employees covered and the duration of the SUB Plan
- cover a period of unemployment caused by 1 or a combination of the following:
- temporary stoppage of work
- illness, injury or quarantine
- require employees to apply for and be in receipt of EI benefits
- require that the combined weekly payments from the SUB Plan and the portion of the EI weekly benefit rate does not exceed 95% of the employee’s normal weekly earnings
- be entirely financed by the employer
- require that on termination, all remaining assets of the SUB Plan will be reverted to the employer or be used for payments under the plan or for its administrative costs
- require that written notice of any change to the SUB Plan be given to Service Canada within 30 days after the effective date of the change
- provide that the employees have no vested right to payments under the SUB Plan except during a period of unemployment specified in the SUB Plan
- provide that payments in respect of guaranteed annual remuneration, deferred remuneration or severance pay will not be reduced or increased by payments received under the SUB Plan.
More information is available here: https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/supplemental-unemployment-benefit.html
D. Working While Collecting EI
An employee receiving EI benefits may work part-time. The employee may keep 50 cents of EI benefits for every dollar earned, up to 90 percent of the employee’s previous weekly earnings (roughly four and a half days of work). Above this cap, EI benefits are then deducted dollar-for-dollar.For Employers
RESOURCES FOR EMPLOYERS
A. Work-Sharing Agreement
The Government has broadened employers’ entitlement to participate in its Work-Sharing program. The program is available for employers for up to 76 weeks, and is available to for-profit and not-for-profit employers who are experiencing a shortage of work.
Through agreement between employers, employees and Service Canada, available work is redistributed through a voluntary reduction in hours worked by all employees within one or more work units. This enables the employer to retain a full work force on a reduced work week rather than laying off part of the work force. The employees will be entitled to receive EI benefits for the days upon which they do not work. To qualify for participation in the Work-sharing arrangement, the employee’s work reduction must be between 10% and 60%.
More information is available here: https://www.canada.ca/en/employment-social-development/corporate/notices/coronavirus.html#work-share.
B. 10% Temporary Wage Subsidy
The 10% Temporary Wage Subsidy for Employers is a three-month measure that allows eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA). The subsidy is available to individuals, partnerships, registered charities, and not-for-profit and for-profit organizations who have employees.
The subsidy is equal to 10% of the remuneration paid from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee to a maximum of $25,000 total per employer.
The employer will continue deducting income tax, Canada Pension Plan (CPP) contributions, and EI premiums from salary, wages, bonuses, or other remuneration paid to employees. The subsidy is calculated when the employer remit these amounts to the CRA. Once the subsidy is calculated, the employer may reduce the current payroll remittance of federal, provincial, or territorial income tax by the amount of the subsidy.
More information is available here: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
C. Canada Emergency Wage Subsidy
Employers who have experienced a decline in revenue due to COVID-19 may apply to the Government for a subsidy of up to $847 per week. The subsidy is available to partnerships, registered charities, and not-for-profit and for-profit organizations who have employees. The decline in revenue must be 15% or more for March 2020 and 30% or more for the subsequent months.
The subsidy amount for a given employee on eligible remuneration paid between March 15 and June 6, 2020 will be the greater of:
- 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
- the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.
The calculation of the decline in revenue is based upon comparing last year’s revenue period to this year’s revenue period:
Period 1: March 15 to April 11
Required reduction in revenue: 15%
Reference period for eligibility: March 2020 compared with March 2019 or the average of January and February 2020
Period 2: April 12 to May 9
Required reduction in revenue: 30%
Reference period for eligibility: Have proven eligibility for Period 1 (see above) OR April 2020 compared with April 2019 or the average of January and February 2020
Period 3: May 10 to June 6
Required reduction in revenue: 30%
Reference period for eligibility: Have proven eligibility for Period 2 OR May 2020 compared with May 2019 or the average of January and February 2020
The Government has also introduced a new 100% 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 covers 100% of employer-paid contributions for eligible employees for each week throughout which those employees are on leave with pay, but does not perform any work, and for which the employer is eligible to claim for the wage subsidy for those employees.
Employers must continue to collect and remit employer and employee contributions to each program as usual. Eligible employers then apply for a refund at the same time that they apply for the wage subsidy. More information is available here: https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html