Emergency Wage Subsidy
What It Means For Your Business
What is it?
The Emergency Wage Subsidy (CEWS) is a support program that is designed to assist businesses of all sizes as they weather any revenue reductions during the COVID-19 pandemic.
The purpose of this program is to give employers the ability to retain employees, avoid having to lower current employees’ typical salaries, and allow businesses to reopen and resume normal operations post-COVID-19. If any businesses have already laid off employees prior to this program’s inception, they are encouraged to re-hire those employees.
Am I eligible?
All business types, with the exception of public entities, who can prove an income reduction, are automatically eligible for this program.
There are two ways to calculate reduced income eligibility:
- Compare 2020’s average monthly income to 2019’s average for the same time period
- Compare 2020’s average monthly income to the monthly average income for previous months in 2020
Option 1 will likely cover 90% of businesses, but Option 2 was created as an amendment to the originally announced program in order to accommodate businesses who were not operating in 2019 during March, April, or June and who cannot show a comparable decrease in income. Only one option can be chosen for all time periods applied for.
There are three income time periods that are covered under this program:
- March 15th - April 11th
- April 12th - May 9th
- May 10th - June 6th
Each of these time periods have a required percentage of reduced income that must be met prior to becoming eligible for applying:
- Period One: 15% reduction
- Period Two: 30% reduction
- Period Three: 30% reduction
Once approved for the first period applied for, a business is automatically eligible and approved for any following periods during which they may also be affected.
Employees must be employed in Canada and must not have been without pay for 14 or more consecutive days within any of the given time periods.
Any employees who are non-arm’s length to the business are eligible as well, but only if they were employed prior to March 15th.
How much will I receive?
Per employee, businesses are entitled to receive 75% of the total paid wages, up to $847 per week. The total paid wages must equal what each employee was making pre-COVID-19, and the business must also provide documentation showing they are making every effort to keep their employees’ wages at that initial amount.
Both arm-length and non-arm length employee wages qualify to be included in the calculation of the subsidy, but things like severance pay, stock option benefits, or corporate vehicle maintenance are excluded. There is, however, no limit on the total amount of a received subsidy.
Also included in this measure are any employer payments to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and/or the Quebec Parental Insurance Plan. Businesses can receive 100% of these payments back as a refund and there is no limit to the amount received for these as well.
Businesses are allowed to choose either the cash or accrual method to calculate their revenue for each time period, but must continue to use the same method to calculate the income during the subsequent time period(s).
What if I am already using the Temporary Wage Subsidy?
Businesses who are also eligible for the Temporary Wage Subsidy program or who have already applied/been approved are still eligible for the Emergency Wage Subsidy (CEWS) program. Any benefit from the temporary 10% subsidy will reduce the total amount received from the CEWS program, however.
What if some of my employees are part of the Work-Sharing program?
Businesses and their employees who may be participating in the Work-Sharing program will still be able to reap benefits from both programs, but it will reduce the total amount an employer can receive under the Emergency Wage Subsidy (CEWS) program. On March 18th, it was also announced that the maximum duration has been extended from 38 weeks to 76 weeks for the Work-Sharing program as well.
Where and how do I apply?
Businesses wishing to take advantage of this program will need to apply for the Emergency Wage Subsidy (CEWS) through the Canada Revenue Agency's My Business Account portal here.
Finance Minister Bill Morneau stated that it is possible the roll-out of this program will take up to 6 weeks with his current estimate sitting between 2-5 weeks.
Where do I find more information?
The Government of Canada has an overview on their website here.
The Retail Council of Canada also has an overview on their website here.
*All information in this article was sourced from the Government of Canada's overview