CLIENT UPDATE March 30, 2020 Economic Response Plan Measures for Businesses and Employees
We are contacting you today to provide an update to government measures implemented to support Canadians, as well as businesses and their employees during the current COVID-19 pandemic.
ECONOMIC RESPONSE PLAN
On March 25, 2020 the Federal government announced updated measures to assist Canadians facing income loss as a result of the COVID-19 pandemic. Now passed, this Economic Response Plan legislation establishes several measures for individuals and businesses, updates or replaces some previously announced benefits, and aims to broaden the reach of support programs, as well as simplify application processes.
MEASURES FOR INDIVIDUALS
Canada Emergency Response Benefit (CERB)
Workers, owners, and self-employed individuals experiencing income loss as a result of COVID-19 are eligible to apply for a $2000 per month taxable benefit for up to four months. This benefit would replace the need for new Employment Insurance benefit applications, and replace the previously announced Emergency Care Benefit and Emergency Support Benefit. (CERB)
Benefit Amount and Payment Frequency
The CERB would be paid every four weeks and be available from March 15, 2020 until October 3, 2020.
Eligibility and application process
Many individuals are eligible for the benefit, including those not usually eligible to claim Employment Insurance (EI) benefits. Eligibility criteria are highlighted below
Applications for this benefit will be available in early April with the goal of payments being issued within 10 days of an individual’s application.
Who is eligible?
The CERB will cover individuals who are experiencing income loss due to the following:
- workers who must stop working due to COVID19 and do not have access to paid leave or other income support;
- workers who are sick, quarantined, or taking care of someone who is sick with COVID-19;
- working parents who must stay home without pay to care for children that are sick or need additional care because of school and daycare closures;
- workers who still have their employment but are not being paid because currently there is not sufficient work and their employer has asked them not to come to work;
- workers not able to work as their business is not an essential service. (CERB)
REMINDER: Employers are reminded that employees who are unable to report to work due to illness including COVID-19 are eligible to apply for any existing short-term disability benefits, as per the terms of your existing group benefit plans. These employees would not be eligible for EI or CERB.
Which groups of individuals are eligible to apply to CERB who may not normally be eligible for EI benefits?
Individuals such as contract workers, the self-employed, students, and international students on work visas would also be eligible to apply for CERB. Business owners of incorporated businesses are also eligible to apply for CERB. Current information on overall eligibility indicates requirements include;
- Must be a resident of Canada;
- 15 years of age or older;
- Have had a total income of at least $5000 (combined) in 2019 or in the 12 months immediately preceding the application.
How does this impact those currently on EI or who have recently submitted EI applications?
Individuals currently receiving EI regular or sickness benefits will continue to receive their benefits, and DO NOT need to apply to the CERB. If those benefits end before October 3, 2020 those individuals can apply to the CERB at the time their benefits end provided they are unable to return to work due to COVID-19.
Individuals who have applied for EI prior to the announcement of the CERB, and whose application has not yet been processed DO NOT need to reapply to EI and should NOT apply for the CERB.
How does the introduction of CERB impact an employer who wants to provide a Supplemental Unemployment Benefit (SUB plan)?
It is anticipated that employers would NOT be able to provide a supplemental unemployment benefit, often referred to as “top up”, as eligibility requirements are based on loss of income. Additional information will be provided as soon as available.
Is A Record of Employment (ROE) required for CERB?
At this time, a Record of Employment (ROE) is NOT required for an employee to apply for the CERB. Employers may still wish to issue an ROE to maintain accurate and up to date payroll records without issuing it to the employee. In some instances ROE’s may still be required for employees accessing other EI benefits for non- COVID-19 related reasons.
If an Employee Chooses to Not Work due to COVID-19 Concerns can they apply to CERB?
Any employee who chooses NOT to report to work, as a personal choice, for concerns related to COVID19 is eligible to take a Leave of Absence. These employees should be issued an ROE indicating Code M for Leave of Absence (LOA). These employees are not eligible for CERB. There is a difference between this and those employees who are refusing to work due to health and safety concerns, including COVID-19, in the workplace. Additional guidance for addressing these situations will be provided in a follow up document this week.
MEASURES FOR EMPLOYERS
Wage Subsidies
On March 27, 2020 the Federal government announced increases to the previously announced employer wage subsidies. The subsidies will increase from 10% to 75%. Previous information provided by the CRA indicated that the wage subsidy would be obtained through reductions in remittance of employer paid source deductions although it is uncertain if this new proposal will work in the same manner.
Details announced on March 30, 2020 indicate that the wage subsidy is available if there is a 30% drop in revenue due to COVID-19. At this time there are no details on how this will be measured.
The wage subsidy will cover the first $58,700 of salary, and businesses are encouraged to pay the balance of the 25%. The government warns that there will be significant penalties for those that attempt to defraud the system.
The announcements today indicate that “businesses large and small” will be eligible so it also appears that all affected businesses will be eligible, not just small to medium sized corporations.
Full details of the way the increase in subsidies will be applied has not been announced and will be shared once available, which is anticipated to be by the end of March.
In the meantime, the Federal government information is provided here: Wage Subsidies
Work Sharing Programs
Existing Work Share Programs
Work sharing programs have been in existence for many years and are not new to some businesses. They are intended to provide the opportunity for employers and employees to enter into an agreement to share the existing work among the employee group in an effort to reduce layoffs. The Federal government announced extensions are available for businesses currently in active work share program agreements, as well as other measures to reduce the waiting time between programs. Any business with a current work share program in place should consult the program guidelines for how to proceed and any impact on their existing program.
New Work Share Programs
Businesses who would like to enter into a new work sharing program to avoid layoffs during the COVID-19 pandemic are encouraged to review the full program guidelines and application criteria. At this time, the government has committed to reduce the application processing time to 10 days instead of the usual 30 day period between the time of the application and when the work sharing could begin. Employees must agree to participation in the program, and are involved in the application process. Businesses are encouraged to consider the longer term implications of the COVID-19 pandemic on their business and explore these alternate options.
Details on the program guidelines for existing agreements and new applications can be found here: Work Share Program
Issuing A Record of Employment (ROE)
Although a Record of Employment (ROE) is not required to access CERB, employees will require an ROE to access regular EI benefits or Work Share programs.
In particular, any employee who chooses NOT to report to work for concerns related to COVID-19 are eligible to take a Leave of Absence. These employees should be issued an ROE indicating Code M(LOA). These employees are not eligible for CERB. An employer should complete an ROE within 5 from the interruption in earnings. The information for ROE’s is available here: How to Complete An ROE
If an employer wishes to, it may “top up” the EI benefits (but NOT CERB) provided to an employee through a Supplemental Unemployment Benefit Plan (SUB Plan). Special rules apply to a SUB Plan, which must be registered with EI. Information on SUB plans is available here: Supplemental Unemployment Benefit
We recognize that there are a multitude of factors to be considered when making business and employee related decisions during these challenging times. We have been fortunate to be able to assist many of you individually over the past few weeks and appreciate the opportunity to do so.
We are happy to connect with you to discuss your specific business circumstances.
Stay well,
Tracey Starrett, M.Ed, CHRL
Director, HR Solutions
Wilkinson & Company LLP Human Resources Solutions
Phone: 613 392-2592 or 613 438-5289
Email: tstarrett@wilkinson.net
Should you have any questions on the information provided in this communication please contact Tracey Starrett at tstarrett@wilkinson.net