Enhanced wage subsidy program offers relief for more workers

By LegalMatters Staff • The new Canada Emergency Wage Subsidy (CEWS) is “more accessible to more businesses,” says Toronto-area employment lawyer Brittany Taylor, who encourages employers to take advantage of the program.

Taylor, a partner at Rudner Law, says the update means “more employers qualifying to help more employees,” while noting the new structure may be confusing to some.

“Many changes have been made to the program, rather than just a few small amendments. It really is an entire restructuring,” she tells LegalMattersCanada.ca. “Do not be scared off by how complex the program appears and use it to your benefit if you can. 

“When you first look at the information, it does seem daunting. But there are government resources available and we are here to assist businesses that have any questions.”

CEWS revision

Earlier this month, Minister of National Revenue Diane Lebouthillier announced the CEWS revisions saying the program “was redesigned to be more flexible and support a wider range of employers.”

The initiative was first introduced in April. After reviewing findings from public consultations on its effectiveness, the federal government announced that the program would be extended until Dec. 19, 2020, in an effort to “better protect jobs and promote growth, and effectively respond as the economy continues to reopen.”

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After its launch, CEWS was criticized for not going far enough to help more businesses.

Chief among the concerns was the fact that employers would have to show a 30 per cent loss in revenue due to the coronavirus pandemic to be eligible for the wage subsidy.

Taylor says she suspects “the government was trying to make sure that only employers that were actually suffering, actually experiencing a loss” would be able to apply.

30 per cent threshold dropped

“What many employers will be excited about now is that the 30 per cent threshold that was required to qualify for the wage subsidy has been eliminated,” she says. “Under the new system, an employer who has experienced any drop in revenue is going to be able to qualify for a base subsidy and the amount of the subsidy is going to depend on the percentage of revenue decline.

“With the new criteria for eligibility, it seems like it’s going to be really helpful for most employers,” she adds.

Taylor says the government introduced a top-up subsidy of up to an additional 25 per cent for employers most adversely affected by the pandemic.

She says the changes “also mean employers won’t get kicked off the wage subsidy as their revenue starts to increase. As long as there is still some decline they are going to continue to qualify.”

‘Safe harbour rule’

As well, Taylor says there is a “safe harbour rule” which essentially means the government is not going to force a business onto the new program if they would have received more funding in periods 5 and 6 through the old system. In period 7, all employers will be moved over to the new CEWS program. 

She says Rudner Law fielded “quite a few questions from employers when the subsidy first came out and we’ve had more as these changes have been implemented.”

“This does come across as a much more complicated system because there are two different subsidies employers can receive,” Taylor says. 

She says “people are still digesting the new information” and waiting for further updates as the CERB winds down.

“It has been an interesting program for us as employment lawyers because the wage subsidy legislation is drafted as an amendment to the Income Tax Act and that is normally a piece of legislation that we really wouldn’t have anything to do with,” Taylor says.

She says one thing employers are going to have to pay attention to is the eligibility rules for employees who are actively working and those who are on layoff or a paid leave of absence.

Change in rates

“It looks like there is going to be a change in rates to distinguish between these two categories of employees,” Taylor says. “We don’t have the details yet but that is certainly something that employers will have to be prepared for in the future.”

She says it is incumbent on businesses to carry out their due diligence to ensure they are getting the maximum benefit from the program.

“This system is going to be more effective in assisting employers,” Taylor says. “Based on the complexity of the program it is a good idea to get advice, not just from legal counsel but every business should be working closely with their financial advisors and their accountants. Businesses need to make sure they are meeting the criteria and are accurately calculating the correct amount of their entitled subsidy.”