This is an update to the March 31st HR brief.
On April 1st Finance Minister Bill Morneau provided some additional details about the government plans to assist businesses hurt by COVID-19. The Canada Emergency Wage Subsidy (CEWS) is designed to discourage companies from laying off workers by offering a wage subsidy of up to 75% of wages, with certain restrictions.
The Federal Government will subsidize up to 75% of wages on the first $58,700 in earnings, which translates to a maximum of $847 per week, per employee.
The program will be backdated to March 15, 2020.
The CEWS is only available to companies who have experienced at least a 30% drop in revenue. The drop in revenue will be assessed on a year-over-year basis. For companies to qualify in March revenues for March must be 30% or more lower than in March 2019. Companies will need to reapply each month to qualify for the program.
The program’s length is set at 3 months and may be extended.
The CEWS is open to companies of all sizes and all industries. Sole proprietorship, partnerships, not-for-profits and charities, as well as private and public corporations are eligible. The only exception is for corporations in the public sector such as municipalities, public schools and hospitals.
How will it work?
The program will be administered by the Canada Revenue Agency (CRA) through the My Business Account portal. The plan calls for money to start flowing within 3 to 6 weeks and all business should register for direct deposit to ensure money can be sent electronically.
What about the previously announced 10% wage subsidy program?
This program is still in effect and business can continue to claim the 10% wage subsidy but cannot claim both. If a company is qualified for the CEWS then CRA will adjust payments accordingly. The 10% wage subsidy program is available to corporations who haven’t seen a drop in revenue and provides 10% or up to $1,375 per employee in wage subsidy, which is capped at $25,000 per employer.
More details are expected to be released by the Federal Government over the coming weeks