This week in Ontario many businesses are re-opening. Employers and employees alike have questions about going back to work and the intersection of re-starting businesses with the various government subsidies that have been tiding many people over.
Bringing Employees Back to Work Using the Canada Emergency Wage Subsidy (CEWS)
Many employers have laid off a good portion of their workforce and now with re-opening are looking to bring some of those workers back. Businesses that have been hit hard financially may be able to take advantage of the CEWS while earnings are still uncertain as business ramps back up. Getting the CEWS for employees who have been laid off is a little complicated because of the definition of an eligible employee. But first, let’s look at eligible employers.
Most employers are eligible for the subsidy, including individuals, partnerships, taxable corporations, non-profits and registered charities. Check out the government’s webpage on who is an eligible employer.
A reduction in revenue of either 15% or 30%, depending on the eligibility period, is required. This can be calculated using the corresponding month in 2019 or the average revenue from January and February 2020.
An eligible employee is an employee who has not been without pay for more than 14 consecutive days in the eligibility period. The eligibility periods are as follows: March 15 to April 11, April 12 to May 9, and May 10 to June 6. The CEWS has been extended to August 29, 2020, so we can expect another eligibility period from June 6 to August 29 to be added, however, this is not currently reflected on the government websites as they likely still need to determine the dip in profits required for this period. If an employer is applying for the CEWS for one of these periods they need to have paid their employee for all the time during that period, other than 14 consecutive days.
This complicates matters when trying to use the CEWS for employees who have been laid off. Many businesses closed during these periods were not paying employees at all, meaning that their employees will not meet the definition of an eligible employee because they have been without pay for more than 14 days in the eligibility period.
Eligible employers can still take advantage of the CEWS by re-hiring employees retroactively and paying them for all but 14 consecutive days of the period they are applying for – effectively bringing the previously laid-off employee into the definition of an eligible employee.
For example, if an employer wants to use the CEWS going forward, they can apply for the period May 10 – June 6. To be eligible they will need to show a 30% reduction in revenue. The employer will need to re-hire previously laid-off employees and pay them a lump sum to account for their pay during the period. The employer can exclude 14 days of pay if the employee was not working. The wage subsidy will then cover 75% of the employee’s wage, up to a maximum of $847 per week, per eligible employee including retroactive payments during the eligibility period.
Currently, the wage subsidy is available from March 15, 2020, to August 29, 2020 and can be received retroactively for time that has already passed.
Employees on the Canada Emergency Response Benefit (CERB)
Many laid-off employees will have been receiving the CERB. An employee will usually not be eligible for the CERB if they are also being paid. This is something that employees should be aware of when rehired, particularly if they are re-hired and paid retroactively – ie for time that has already passed.
If employees who are re-hired already received the CERB for the same period for which they are now being paid, the employee will likely be required to re-pay any CERB payments received for the same period.
There is a lot of good information on government websites, but accessing government benefits and getting back to work brings up lots of questions! Get in touch to set up a consultation so we can help you navigate bringing employees back to work.