Doors Open!: Federal Government Invites Applications for Canada Emergency Response Benefit and Releases Details of Canada Emergency Wage Subsidy in Wake of COVID-19

Today, the federal government launched a CRA portal for Canadians to apply for a new key assistance program for employees, the Canada Emergency Response Benefit. In addition, further details were released last week about the Canada Emergency Wage Subsidy, a proposed assistance program for employers.

Canada Emergency Response Benefit

To assist employees who are no longer working for various reasons due to the Coronavirus (COVID-19), the Government of Canada has initiated a benefit intended to be more easily accessible than Employment Insurance (EI) benefits, called the Canada Emergency Response Benefit (CERB).

This benefit is not only for those who are quarantined and cannot work because they have been diagnosed with COVID-19, but also for those who have lost their job, are caring for someone who is sick with COVID-19, or who are caring for their children home from school or daycare. The CERB may also be available for contract/self-employed workers who are not eligible for EI. Further, employees who have continued to work, but have not received income due to financial disruptions within the business, are also eligible to apply.

Employees who are eligible for this benefit will receive $2,000 for a 4-week period for up to 16 weeks, up to $8,000 in total. Unlike EI regular benefits, this benefit is not determined by a sliding scale. This means that the amount a person receives will not be calculated based on their salary or wages. Rather, it will be $500 per week across-the-board for all individuals who are deemed eligible for the benefit. The benefit will apply retroactively to March 15, 2020. Payments will be made in fixed blocks of 4 weeks.

Who Can Apply?

Among other requirements to be eligible for the CERB, employees must have had an income of at least $5,000 in 2019 or in the 12 months prior to the date of their application and they must not have voluntarily quit their jobs. Further, employees must be unemployed for at least 14 consecutive days in the first 4-week period. Following this 4-week period, the employee must expect that they will have no income whatsoever.

A person does not necessarily need to be ‘laid off’ in order to be eligible for the CERB.

How to Apply?

Applications can be made through an online CRA portal or by phone starting today.

A medical certificate will not be necessary to apply. In an employee’s initial application, they will need to include their personal contact information, social insurance number and must be able to confirm the above-mentioned eligibility requirements. An employee may be asked to provide further documents at a later date to confirm eligibility requirements.

Once an employee becomes eligible for the CERB, an employee can expect to receive payments as soon as 3-5 days after the submission of their application.

If an employee is on maternity/parental leave, it is anticipated that this employee will return to work once their leave ends and they would be ineligible for the CERB. However, if an employee’s leave ends and work is not available to them, they are then eligible to apply for the CERB.

The CERB is taxable however tax deductions will not be deducted initially, and employees who receive payment must report CERB as income when filing their 2020 income tax return.

EI and CERB

Several questions have surfaced since the announcement of the CERB on March 25, 2020 about how this new benefit intersects with EI.

The Government of Canada’s website says the following:

Canadians who are eligible for Employment Insurance and who have lost their job can continue to apply for Employment Insurance.

If you became eligible for EI regular or sickness benefits on March 15, 2020 or later, your claim will be automatically processed through the Canada Emergency Response Benefit.

For other EI benefits, including maternity, parental, caregiving, fishing and worksharing, you should also continue to apply.

Canada Emergency Wage Subsidy

On April 1, 2020, the Government of Canada announced further details of the proposed Canada Emergency Wage Subsidy (CEWS), initially announced on March 27, 2020, by Prime Minister Justin Trudeau.

The intentions of this program are apparently to safeguard the jobs of a business’ employees and to prevent further job losses that have swept over Canada due to the COVID-19 pandemic. Further, the subsidy appears to be designed to assist businesses to ease back into their normal practices when the pandemic is over. If a business is deemed eligible, the CEWS would be retroactive to March 15, 2020. The amount of employees working for the business does not affect eligibility for this subsidy. Businesses who would be eligible for the CEWS include individual businesses, taxable corporations, partnerships, non-profit organizations and registered charities. Public bodies, including public universities, colleges, municipal/provincial and federal bodies, schools and hospitals would not be entitled to the CEWS.

Additionally, to be eligible for the subsidy, an employer would have to provide proof that they have had a 30% loss of revenue during March, April and May of 2020 compared to the revenues during the same months of 2019. Employers will have to reapply for each month that they experience a loss of 30% of their revenue.

For eligible businesses, up to 75% percent of an employee’s first $58,700 of their salary “normally earned”, would be covered by the subsidy. The maximum an employer can claim per employee is $847 per week. Calculations for the employee’s subsidy entitlement would be determined based on the salary or wages actually paid to employees. The CEWS would apply retroactively to the 12-week period from March 15, 2020 until June 6, 2020. If eligible, employers may expect to receive payments by direct deposit within 6 weeks.

Employers would not be eligible to claim the CEWS for employees who receive the CERB for the same period.

The Government of Canada would require employers to make best efforts to “top up” the remaining 25% of wages and salaries.

Prime Minister Justin Trudeau announced on April 1, 2020 that this program will be one of trust and if a business is found abusing the program, penalties will be “stiff and severe.”

75% Subsidy and 10% Subsidy

The 75% subsidy and the 10% wage subsidy announced previously are not the same program. Therefore, if a business is ineligible for the 75% subsidy, it still may qualify for the 10% subsidy. Businesses do not need to apply for the 10% subsidy. The subsidy is calculated when a business remits amounts including Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums from salary, wages, bonuses, or other remuneration paid to employees. For businesses that receive both subsidies, the amount received for the 10% wage subsidy would generally be deducted from the amount claimed under the CEWS.

Importantly, employers must be aware that the 10% subsidy is a three-month measure specific to small businesses, charities and non-profit organizations and a decline in revenue is not necessary for eligibility.

We will continue to monitor these and other COVID-19 related initiatives.

For further information on these and other COVID-19 related programs, contact Zubas + Associates at 416-593-5844 or info@employment-lawyers.ca.

*Editor’s Note – Update on the Canada Emergency Wage Subsidy

On April 11, 2020, Bill C-14 received Royal Assent, meaning that the new Canada Emergency Wage Subsidy is now legislated and employers will soon be able to apply for this assistance.

As stated in the April 6, 2020 blog, employers who are deemed eligible will be able to receive 75% wage subsidies up to a weekly maximum of $847 per eligible employee for up to 12 weeks. The wage subsidies will be retroactive to March 15, 2020 and will continue until June 6, 2020. The program may be extended as late as September 30, 2020, possibly with revised qualifying parameters and subsidy amounts.

Currently, the CEWS consists of three periods. To qualify for the first period, for the month of March 2020, employers will need to incur a 15% reduction in revenue in order to be eligible for the wage subsidy. For the months of April and May 2020, the employer will have to show a 30% reduction in revenue. If employers qualify for one period, they will automatically qualify for the following period.

To establish the necessary reduction in revenue, employers are permitted to compare their revenue for each of the months of March, April and May 2020 to either:

    • their revenue for those same months of 2019 (e.g. revenue in March 2020 would be compared to revenue in March 2019); or
    • their average monthly revenue in January and February 2020.

An employer’s participation in the Work-Sharing program will affect the amount of the wage subsidy for which the business will be eligible, however an employer can still apply for the subsidy.

Covering Those who cannot Work During COVID-19: Changes to the Canada Labour Code Leaves of Absence Provisions

In the onslaught of Coronavirus Disease 2019 (COVID-19), many employees are concerned about not being able or available to work due to health issues or family obligations.

We recently wrote about the new “Infectious Disease Emergencies” leave introduced for provincially-regulated employees in Ontario in response to the COVID-19 pandemic, but what about federally-regulated employees?

This week, the Government of Canada has fast-tracked laws in response to COVID-19.  On March 25, 2020, the COVID-19 Emergency Response Act was passed, including amendments to the Canada Labour Code (the “Code”) which applies to employees working in federally regulated sectors (such as the banking, telecommunications, radio and broadcasting, marine shipping, airline, rail, and telecommunications industries and many First Nation activities). 

In summary, the changes to the law relaxed the requirements for medical certificates for the next several months and created a new leave of absence in response to COVID-19.

Medical Certificates

Due to concerns about the over-burdened health care sector, public health and the impracticality of obtaining a doctor’s note in the midst of the COVID-19 crisis, an employee’s obligation to provide certificates supporting various existing leaves of absence from work have been temporarily waived.

Until September 30, 2020, entitled employees may take one of the following leaves, even without a doctor’s note:

  • Compassionate Care Leave (which is up to 28 weeks to provide care or support to a family member who has a serious medical condition with a significant risk of death)
  • Leave Related to Critical Illness (which is up to 17 weeks to care for a critically ill adult family member and up to 37 weeks to care for a critically ill child family member)
  • Medical Leave (which is up to 17 weeks for an employee’s own personal illness or injury; organ or tissue donation; or medical appointments during working hours)

COVID-19 Leave

A new “Leave Related to COVID-19” was also created for up to 16 weeks (which may later be increased by regulation) if the employee is unable or unavailable to work for reasons related to COVID-19.

Notices and Declarations

Under the COVID-19 leave, employees are obliged to give written notice to the employer of the reasons for the leave and the length of the leave that they intend to take. Employees must also give written notice of the change in the length of the leave they intend to take, as soon as possible.

Employers may require employees to provide a written declaration in support of the reasons for the COVID-19 related leave and of any change in the length of that leave.

Job Opportunities

Employees are entitled, on written request, to be informed of every employment, promotion or training opportunity (for which they are qualified) that arises during the period when they are on COVID-19 leave. On receiving that request, the employer must provide the information to the employee.

Employees may wish to make the request to avoid missing out on any work opportunity as the workplace adapts to the challenges of COVID.

Protections for Employees

Employers are prohibited from dismissing, suspending, laying off, demoting or disciplining employees because of a leave related to COVID-19. Where an employee is unable to perform the work they performed prior to their leave, the employer may assign the employee to a different positions with different terms and conditions of employment.

Benefits and Vacation

Pension, health and disability benefits and the seniority of an employee continue to accumulate during COVID-19 leave, unless contributions are not made. Employers are required to continue make benefits contributions during the leave, unless an employee opts not to continue to pay their own portion of the contributions. Employee are required to pay their portion of benefits contributions, unless within a reasonable time of the start of the leave, the employee notifies the employer that the employee intends to discontinue contributions during the period.

The new provisions allow vacation to be interrupted to take COVID-19 Leave.

Employment Insurance Amendments

Employees taking any of the above leaves, including COVID-19 leave, should inquire about their eligibility for Employment Insurance (EI) benefits, such as sickness benefits or the new Canada Emergency Response Benefit (CERB).

New Quarantine Leave

On October 1, 2020, the above COVID-19 leave will be repealed and a new provision for “Quarantine” leave of up to 16 weeks, will be incorporated into the existing medical leave provisions.

Job Security and Redress

Employees should be aware that, despite the protections afforded to them by the Code, taking a COVID-19 leave or another leave under the Code, will not grant an employee immunity from dismissal or layoff. The prohibitions relating to COVID-19 leave and the broad reprisal protections of the Code are limited in scope and depend the particular set of circumstances. In any event, additional protections are in place for employees, who experience a breach of their human rights or unjust dismissal or wrongful dismissal.

For legal counsel about your employment rights and obligations as they relate to COVID-19, contact the team at Zubas + Associates Employment Lawyers at info@employment-lawyers.ca or 416-539-5844.