April 13, 2020
On March 17, 2020, the Ontario government declared a state of emergency in response to the COVD-19 pandemic. Since then, a number of provincial and federal measures have been put in place to assist employers and employees, and also to keep Ontarians safe, during these challenging and unprecedented times.
Our collective new reality and employment legislation is changing day by day and sometimes hour by hour. In this article, we have highlighted some of the significant measures impacting the employment relationship in Ontario as of the date of publication. We also discuss temporary lay-offs and some of the benefits and risks worth considering during this time of crisis.
CANADA EMERGENCY RESPONSE BENEFIT
The new Canada Emergency Response Benefit (“CERB”) provides $2,000 per month, for up to 4 months (16 weeks) to qualifying individuals who have stopped working (including self-employed individuals) because of COVID-19 and are not receiving Employment Insurance (“EI”) benefits for the same eligibility period. The CERB is also available for workers who have no income due to the COVID-19 slowdown, but who have not been laid off or terminated, as well as people who are sick or quarantined, and parents who must stay home without pay to care for children because of COVID-19.
Applications are now available through either the Canada Revenue Agency (“CRA”) or Service Canada here.
For persons who became eligible for EI prior to March 15, 2020, the claim will be processed under the pre-existing Employment Insurance rules.
For persons who became eligible for EI regular or sickness benefits on March 15, 2020 or later, the claim will be automatically processed through the CERB. However, such persons will retain their eligibility to receive EI after they stop receiving the CERB, and the period for which the CERB was paid will not impact EI entitlement.
For more on the eligibility criteria and further information, visit the Government of Canada website here.
CANADA EMERGENCY WAGE SUBSIDY
The Canada Emergency Wage Subsidy (“CEWS”), which was passed into law on April 11, 2020, is designed to prevent further job losses, encourage employers to re-hire workers previously laid off as a result of COVID-19, and better position Canadian employers to more easily resume normal operations following the crisis. The CEWS is retroactive from March 15, 2020 to June 6, 2020 and provides eligible businesses with the greater of:
- 75% of the amount of remuneration (salary, wages and taxable benefits) paid, up to a maximum benefit of $847 per week; and
- the amount of remuneration paid, up to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration, whichever is less.
This means employers may be eligible for a subsidy of up to 100% of the first 75% of pre-crisis wages or salaries of existing employees. Employers are expected to make their best effort to top-up employees’ salaries to pre-crisis levels.
The pre-crisis remuneration for a given employee is based on the average weekly remuneration paid between January 1 and March 15, 2020 inclusively, excluding any seven-day periods in respect of which the employee did not receive remuneration.
Eligibility is determined by the change in an eligible employer’s monthly revenues, year-over-year, for the calendar month in which the claim period began. Alternatively, employers may calculate their change in revenue by using an average of revenue earned in January and February 2020, as set out below:
|Claim Period||Required Revenue Reduction||Reference Period for Eligibility|
|Period 1||March 15 to April 11||15%||
March 2020 over:
· March 2019; or
|Period 2||April 12 to May 9||30%||
Eligible for Period 1
April 2020 over:
· April 2019; or
|Period 3||May 10 to June 6||30%||
Eligible for Period 2
May 2020 over:
· May 2019; or
For more on the eligibility criteria and further information, visit the Government of Canada website here.The online application portal is expected to be available in mid-April 2020 through CRA’s My Business Account portal. Funds are expected to be paid 2-5 weeks after applying.
TEMPORARY WAGE SUBSIDY
The Temporary Wage Subsidy, which is included in the COVID-19 Emergency Response Act and received Royal Assent on March 25, 2020, allows employers to reduce income tax remittances on 10% of remuneration paid between March 18, 2020 and June 19, 2020 to a maximum of $1,375 per employee and $25,000 per employer.
For employers that are eligible for both the CEWS and the Temporary Wage Subsidy for a period, any benefit from the Temporary Wage Subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the CEWS in that same period.
The benefits and entitlements discussed above should be carefully reviewed with an accountant.
The Ontario Employment Standards Act (“ESA)” provides for temporary layoffs (see s. 56(2)). The lay-off provisions of the ESA enable an employer to lay an employee off work for a limited period of time, essentially putting the employment relationship on pause. The employee is generally not entitled to pay during the layoff period.
Temporary lay-offs have a variety of advantages for an employer as they can reduce payroll costs significantly while typically preserving the employment relationship. The employer may recall the employee to work once they are back up and running, which allows the employer to more easily resume normal operations following a crisis or downturn. If the employee is recalled within the prescribed time period, the employment relationship generally continues and termination entitlements under the ESA are not triggered.
For employees, a temporary lay-off means the employee may be eligible for EI benefits.
However, temporary lay-offs are not without risk for employers. We invite you to contact our Employment Group to review your specific circumstances and discuss strategies for dealing with employment issues during these difficult times.