The Canada Emergency Wage Subsidy (the “Subsidy”) is a measure announced by the Government of Canada providing a 75-per-cent wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020.  

On April 11, 2020, Bill 14 - A second Act respecting certain measures in response to COVID-19 passed in Parliament and received Royal Assent, bringing this measure into law. After reviewing the passed Bill and the Subsidy, Field Law’s Labour and Employment team tackled eight questions employers are asking:

1. Is there a maximum amount of subsidy? Yes. The subsidy covers 75% of the first $58,700 of an employee’s income, resulting in a maximum payment per employee of $847 per week. As mentioned above, the Subsidy may be granted for a period covering up to 12 weeks, retroactive to March 15, 2020.
2. Which employers are eligible for the Subsidy? The following employers may be eligible for the Subsidy:

• Individuals;
• Taxable Corporations;
• Sole proprietors (the wages of the owner are also eligible);
• Partnerships (provided all partners are eligible);
• Non-profit organizations; and
• Registered charities.

Public institutions are not eligible for this Subsidy. This generally includes municipalities, Crown corporations, wholly owned municipal corporations, public universities, colleges, schools, health authorities and hospitals.

3. What are the qualifying conditions of the Subsidy? Eligible employers must show a drop of at least 15% of their revenue in March 2020 and 30% for the following months.  

To calculate the drop in revenue, an employer may compare their 2019 and 2020 revenues, or compare their March, April and May 2020 revenue to an average of the revenue earned in January and February 2020. The employer can choose the accounting method, but must maintain the same method for the length of the Subsidy. A helpful Chart that breaks this down for employers has been created by the Government:

Source: Government of Canada 

4. How will this impact my Company’s taxes? Generally, as the Subsidy is government assistance, amounts received will count as income for the employer for 2020. For further information on potential tax ramifications, contact Field Law’s Tax Services Team.

5. Is there anything I should be worried about, before applying? Some employers may be concerned about the fact that the Government can make available to the public the name of any employer that makes an application for the Subsidy.
6. What about record keeping? Employers must keep records demonstrating their decline in revenue and regarding remuneration paid to employees.

Employers engaging in artificial transactions to reduce revenues to claim the Subsidy must repay the full amount of any subsidy received and will be subject to a penalty equal to 25 percent of the subsidy claimed. In cases of fraudulent claims, penalties include fines or even imprisonment.

7. How does the Subsidy Interact with the Work-Sharing Program? The Work-Sharing Program provides income support to employees eligible for EI benefits who work a temporarily reduced workweek while their employer recovers from a temporary reduction in the normal level of business activity that is beyond the control of the employer. The Government has explained that for employers and employees participating in a Work-Sharing Program, EI benefits received by employees through the Work-Sharing program reduce the benefit that their employer is entitled to receive under the CEWS.
8. How to Apply? Applications for the Subsidy can be made by eligible employers through the Canada Revenue Agency’s My Business Account portal.

Field Law's Labour + Employment Group is able to answer your questions about the Subsidy, temporary layoffs, and other legal issues that may arise for employers through the COVID-19 pandemic.