On March 27, 2020, the federal government announced an intention to introduce a wage subsidy for businesses and organizations experiencing at least a 30% decrease in revenue as a result of the COVID-19 pandemic. On April 1, 2020, some additional details regarding the wage subsidy were announced.
While the complete details of the subsidy will not be known until the legislation is introduced, here is the information that we know about the Canada Emergency Wage Subsidy (the CEWS”) so far:
- The CEWS is available to businesses, non-profit organizations and registered charities. It is not available to publicly funded organizations.
- The government will cover up to 75% of the first $58,700 normally earned by employees, which results in payments of up to $847 a week.
- Eligible remuneration may include salary, wages, and other remuneration that would be subject to tax withholding. However, it does not include severance pay, or items such as stock option benefits or the personal use of a corporate vehicle.
- The CEWS is in place for a period of 12 weeks, from March 15 until June 6, 2020. The government will consider whether to extend the subsidy.
- To be eligible, an employer must:
- Have experienced at least a 30% decrease in revenue in March, April or May compared to the same month in 2019;
- Have paid the salaries or wages of the employees for whom the employer is seeking the subsidy; and
- Attest that it is doing everything that it can to pay the remaining 25% of the employees’ salaries or wages.
It would seem that a business/organization must reapply for the subsidy each month that the threshold 30% decrease in revenue is met.
The government is encouraging businesses and organizations to re-employ laid-off employees in order to be eligible for the CEWS.
Eligible businesses or organizations should speak to their tax professionals because the wage subsidy is considered government assistance and will be included in the employer’s taxable income.
We will continue to provide updates as they become available regarding this important new subsidy.
We know that the number of potential employer and employee government benefit plans makes it difficult to remember the details of each of the plans. As a result, we have created a summary document outlining each plan and its eligibility criteria. View our COVID-19 Benefits Options Summary.
For more information on this article or the benefits overview document, please contact Ilan Burkes, Nicole Toye, Sari Wiens or Jessica Fairbairn.
Note to our Readers: Information regarding COVID-19 is rapidly evolving. We are working to bring you up-to-date articles as the legal issues develop and to keep our previous posts updated. Given that the legal issues related to COVID-19 are constantly changing, if you are looking for legal advice or are dealing with an issue in relation to COVID-19, please contact your Harris lawyer or a member of our COVID-19 response team: Sari Wiens, Ilan Burkes, Nicole Toye or Jessica Fairbairn.
To read our most recent articles and other updates on COVID-19, visit our COVID-19 Updates page.
