July 20, 2020

As I advised last week, it has been announced that the Canadian Emergency Wage Subsidy (CEWS) program will be extended to cover the period up to November 21, 2020, with the intent to provide further support until December 19, 2020. 

The government has shared draft legislative proposals that revise aspects of the CEWS and also provide some flexibility to ensure the wage subsidy can adjust to the needs of businesses if economic conditions change.

Finance Minister Bill Morneau announced details of the extension on Friday, July 17. He also detailed the revisions designed to provide assistance to a wider variety of businesses and organizations in more business sectors and address the evolving impact of the COVID-19 pandemic.

In the proposed changes, CEWS will incorporate a rate structure that adapts with the monthly circumstances and situation of the businesses applying for assistance.

The details of the changes are too extensive for me to cover in this client update email, but I have provided a summary for you below. Full information can be found on the Government of Canada Website: Adapting the Canada Emergency Wage Subsidy to Protect Jobs and Promote Growth.

Background

The CEWS program was initially introduced at the onset of the pandemic in Canada, providing a 75-per-cent wage subsidy to eligible employers to cover the 12-week period from March 15 to June 6, 2020.

The 12 weeks were broken into 4 week eligibility periods, with similar, but slightly different, qualifying criteria for each.

On May 15, 2020 the Government announced that it would extend the CEWS by an additional 12 weeks to August 29, 2020. 

It also announced that it would hold public consultations with businesses and other stakeholders to understand if the CEWS was addressing the changing business environment and challenges as provincial and territorial economies began to reopen. 

On June 10 the government announced that the same eligibility criteria for the initial three 4-week periods (March 15 to June 6, 2020) would continue to apply for the period June 7 to July 4, 2020.

Public Input
The proposed revisions to the CEWS are intended to address the concerns and issues raised during the public consultation. These included:

1. a concern from employers that the current 12-week extension until August 29 may not be enough to help businesses that continue to struggle given the uneven impacts across economic sectors
2. a desire that the 30% threshold be lowered each month to allow businesses to increase their sales and still be eligible for CEWS
   • some employers also find the current 30% revenue decline test too stringent. They argue that businesses experiencing revenue drops of less than this amount may still be heavily affected by the pandemic
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3. recognition among employers of a need to provide additional support for those that were particularly adversely impacted, such as food service

New Structure

Effective July 5, 2020, the CEWS would consist of two parts:

1. a base subsidy available to all eligible employers that are experiencing a decline in revenues, with the subsidy amount varying depending on the scale of revenue decline
   • This base CEWS would be a specified rate, applied to the amount of remuneration paid to the employee for the eligibility period, on remuneration of up to $1,129 per week. 
2. a top-up subsidy of up to an additional 25 per cent for those employers that have been most adversely affected by the COVID-19 crisis.
   • Generally, an eligible employer’s top-up CEWS would be determined based on the revenue drop experienced when comparing revenues in the preceding 3 months to the same months in the prior year.

The two-part CEWS would apply with respect to the remuneration of active employees. 

A separate CEWS rate structure would apply to furloughed employees.

In addition, a safe harbour would be available to ensure that, through August 29, employers would have access to a CEWS rate that is at least as generous as they would have had under the initial CEWS structure.

The Government of Canada web page Adapting the Canada Emergency Wage Subsidy to Protect Jobs and Promote Growth has full charts and tables outlining details of the proposed CEWS revisions which you can reference to assess how the program would apply to your specific situation.