Moving Away from the CERB: Redesigning the CEWS ProgramWednesday, July 22, 2020
On Friday July 17, 2020, the federal Government released draft legislation aimed at significant revisions to the Canada Emergency Wage Subsidy (“CEWS”) program. The draft legislation comes as the country re-opens, businesses call employees back to work and fewer employees access the Canada Emergency Response Benefit (“CERB”). The Government notes that the goal of the CEWS program is to protect jobs by helping businesses keep employees on the payroll and encouraging employers to re-hire employees previously laid off. Launched in April (see our previous update describing the CEWS here), the take-up by Canadian employers has not been as significant as the government expected and there has been criticism that the process and legislation are too complex. The changes proposed, although designed to broaden the CEWS to make it accessible to a broader group of businesses, are no less complex.
Effective July 5, 2020, here are some of the highlights:
- Extending the CEWS until December 19, 2020, including redesigned program details until November 21, 2020.
- Moving away from the requirement that employers have a 30% decline in revenue, the CEWS now consists of two parts regarding a subsidy for salaries for active employees:
1. A base subsidy available to all eligible employers that have a decline in revenue, with the subsidy amount varying depending on the degree of revenue decline. The base CEWS rate would be a specified rate, applied to the amount of remuneration paid (up to $1,129 per week) to the employee for the eligibility period.
2. A top-up subsidy of up to an additional 25% for employers that are most affected by Covid-19. Employers that have experienced a 3-month average revenue drop of more than 50% would receive a top-up CEWS rate equal to 1.25 times the average revenue drop over 50%, up to a maximum top up rate of 25%.
The details of the rates and benefits of both subsidies can be found here on the Government’s website.
- Providing certainty for employers for July and August 2020 by ensuring that, through August 29, 2020 employers have access to a CEWS rate that is at least as generous as they would have had under the previous rules.
- For laid off employees, for periods 5 and 6 (until August 29), the subsidy calculation will stay the same as the previous periods. Beginning in period 7, the CEWS will be adjusted to align with the benefits provided through the CERB and/or employment insurance.
- Starting with period 5 (July 5), an employee who is without remuneration for 14 or more consecutive days in a period is no longer excluded from being an eligible employee for that period.
- Certain technical issues identified by stakeholders are addressed in the draft legislation.
This update is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation.