Helping Employers Understand the Canada Emergency Wage Subsidy
On April 11, 2020, the COVID-19 Emergency Response Act, No. 2, which includes the Canada Emergency Wage Subsidy (the “CEWS”), received Royal Assent and is now available to employers.
How do I know if I am eligible for the Canada Emergency Wage Subsidy?
The CEWS is available to all “eligible employers,” which includes individuals, corporations, partnerships, non-profits and registered charities. In order to qualify for the CEWS, employers must confirm and provide documentation showing a decline in monthly revenues of at least 15% in March, and 30% in April and/or May, as compared to either: (i) that same month in 2019; or (ii) the average of the employer’s January and February, 2020 revenue.
Eligible employers can apply for the CEWS through the Canada Revenue Agency’s My Business Account portal. An employer that qualifies for one subsidy period (e.g. March) automatically qualifies for the subsequent period (e.g. April).
How much is the subsidy?
The CEWS program provides employers with a wage subsidy for eligible employees of up to $847 per week, retroactive to March 15, 2020, for eligible remuneration paid for the period between March 15, 2020 and June 6, 2020 (even newly hired employees). The eligible periods to claim the CEWS are: March 15 to April 11, 2020, April 12 to May 9, 2020, and May 10 to June 6, 2020. The CEWS does not obligate the employer to top-up the employee’s wages above the subsidized amount.
Who are eligible employees
An eligible employee is an individual employed employer during the claim period, except if there was a period of 14 or more consecutive days in that period where they did not receive any pay (eligible remuneration). Employees who have been laid off can become eligible retroactively, as long as the employer rehires them and their retroactive pay and status meet the eligibility criteria for the claim period. You must rehire and pay such employees before you include them in your calculation for the subsidy
What is eligible remuneration
Eligible remuneration includes amounts you paid an employee as salary, wages and other taxable benefits, fees, and commissions. These are amounts employers would be required to make payroll deductions on to be remitted to the CRA.
Severance pay and items such as stock option benefits or the personal use of a corporate vehicle are not part of eligible remuneration.
Does the CEWS replace the 10% temporary wage subsidy announced in March?
The CEWS does not replace the 10% temporary wage subsidy announced by the federal government in March. Employers that are not eligible for the CEWS may still qualify for the 10% subsidy, which remain available to certain categories of employer and does not require a reduction in revenue in order to qualify.
Can I take advantage of both subsidies?
An employer cannot take advantage of both subsidies simultaneously. For employers that qualified for the temporary wage subsidy and the CEWS, the amount of the temporary wage subsidy will be deducted from the subsidy under the CEWS program.
Communications on this website are intended for information purposes only and do not constitute legal advice or an opinion on any issue. Readers are cautioned against making any decisions based on this material alone. The lawyers of Waterous Holden Amey Hitchon LLP would be pleased to provide additional details or advice about specific situations.