COVID-19 Developments and Legal Updates

Richard Jordan

On April 8, 2020, the Government of Canada provided employers with further information about – and revisions to – the Canada Emergency Wage Subsidy (CEWS) program.

Last week, the Government of Canada announced:

• CEWS provides all employers, who see a 30% or more decline in gross revenues since the same time last year, with a wage subsidy of up to 75% for the first $58,700 of eligible remuneration that an employee earns, up to a maximum of $847 per week.
• The CEWS is a 12-week program, retroactive to March 15, 2020 and ending on June 6, 2020.  Employers will need to reapply each month.
• Employers will need to attest that they are doing everything they can to pay the remaining 25% of each employee’s income.

Yesterday, the Government of Canada announced some modifications to the CEWS program, including:

• For the month of March, employers will now only have to show a 15% decrease in revenues (rather than 30%), because many businesses did not begin to be affected by the COVID-19 crisis until partway through the month (For April and May, employers will still have to show a 30% decrease in revenues).
• To measure revenue loss, all employers will now have the option of comparing their revenues for March, April and May 2020 either to those of the same month in 2019, or to an average of their revenues earned in January and February 2020.
• Employers will be allowed to measure revenues either on the basis of accrual accounting (as they are earned) or cash accounting (as they are received).  Businesses are being permitted to make this choice because the time between when revenue is earned and when it is paid can be highly variable in certain sectors of the economy.
• The Government of Canada proposes to introduce 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 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.
• Charities and non-profit organizations will be allowed to choose to include or exclude government funding in their revenues for the purpose of applying the revenue reduction test.

Further information about the changes to the CEWS announced yesterday can be found at the Department of Finance’s website.

The Government of Canada continues to consult with the opposition parties about a date to recall Parliament to pass further COVID-19 legislation, including the CEWS, but no date has yet been confirmed.

This article is provided for general information only. If you have any questions about the above, please contact a member of our Labour and Employment group.

Click here to subscribe to Stewart McKelvey Thought Leadership articles and updates.