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Update on the Proposed Canada Emergency Wage Subsidy (CEWS)

The federal government revealed more details about the Canada Emergency Wage Subsidy (CEWS), a subsidy that will be provided to Canadian businesses to relieve some of the stress felt as a result of the slow-down in business because of COVID-19. This blog post contains information provided by Bill Morneau, the federal Minister of Finance, in a press conference held April 1, 2020.

The Subsidy

Eligible businesses will receive 75% of the first $58,700.00 of employee wages, per employee. That equates to a total of up to $847.00 per week, based on a yearly salary of $58,700.00. When the subsidy rolls out in approximately 6 to 8 weeks, it will be back-dated to March 15, 2020. The CEWS is available in addition to the previously announced 10% subsidy on payroll deductions for certain eligible businesses (NOTE: a previous version of this post incorrectly stated that the CEWS was to replace the previously announced 10% subsidy).

Notably, since the CERB is an employment insurance benefit, employees cannot receive the CERB while their employer receives the CEWS. See our blog post about the CERB for more information about that benefit.

Eligibility and Requirements

In order to be eligible, a business must demonstrate a 30% decline in gross revenues as compared to gross revenues from the same month in the previous year. Businesses will have to re-apply for the subsidy every month. It also appears that businesses will need to prove that they have already paid each employee their full wage for the given month in order to receive the subsidy. Thus, it seems that the subsidy will effectively reimburse eligible employers for a portion of their payroll expenses in any given month.

The only other requirement announced at this time is that the employer will have to attest that it is doing everything it can to pay the balance of each employee's wage not covered by the subsidy.

The subsidy will be available to all non-publicly-funded businesses, including charities and not-for-profit organizations, regardless of size and number of employees.

How to Apply

A portal will be set up with the Canada Revenue Agency in the next 3 to 6 weeks for businesses to apply for the CEWS online. It is therefore important that your business set up a CRA online portal account and arrange for direct deposits if it has not already done so if you would like to take advantage of this program and to expedite payment of the subsidy.

Start-Ups

Unfortunately, the way the CEWS is currently structured means that many new businesses may be ineligible if they cannot show revenue in any given month the previous year. When asked about this, Mr. Morneau recognized this difficulty and suggested that the government may consider allowing certain businesses to use a different eligibility test (e.g. demonstrating a 30% drop in gross revenue as compared to the month immediately before losses due to COVID-19, rather than as compared to the previous year).

More Details Expected

As this is a "proposed" plan, there will likely be more details to come. It is not clear what tool the government will use to implement this plan, however, if the CERB is any indication, there may be some legislation with respect to the CEWS in the coming days. More details will be posted to this blog when available.

Note: while this blog and the information above provides general information, it does not constitute legal advice. The best way to get guidance on your specific legal issue is to contact a lawyer. For more information about the CEWS, or if you have any other questions regarding your employment issue, please contact our office for a consultation with one of our lawyers.

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