On June 29, 2021, Bill C-30 received royal assent, extending the Canada Emergency Wage Subsidy (“CEWS”), and introducing the Canada Recovery Hiring Program (“CRHP”). Both programs are aimed at providing financial support to employers as Canada’s economy attempts to recover from the impacts of the COVID-19 pandemic.
Changes to CEWS and other Programs
Bill C-30 initially extended the CEWS to September 25, 2021, and provides that the program may be further extended to November 20, 2021. More recently, the federal government has announced that CEWS will be extended until October 23, 2021. Eligible employers that are still experiencing revenue declines relative to pre-pandemic levels can continue to apply for assistance in subsidizing the wages of their employees.
This extension does not bring any significant changes to the CEWS, which we have written about in several prior blogs, including here, and here. There are, however, some alterations and additions that employers should be aware of:
- as of Period 18, beginning on July 2, 2021, a business must show a decline in revenues of more than 10% to qualify for the CEWS;
- publicly listed corporations that are receiving the subsidy and are paying certain executives more in 2021 than they did in 2019 may be required to repay some or all amounts received under the CEWS after June 5, 2021 and onward;
- CEWS will no longer include remuneration given to employees on paid leave after Period 19, which ends on August 28, 2021.
Further changes to the CEWS have been proposed. If accepted, these changes would include an increase in the amount of subsidy recoverable between August 29, 2021 and September 25, 2021, as well as allowing greater flexibility in pre-pandemic revenue calculation for employers who were not operating as a business prior to March 1, 2019.
Several other COVID-19 benefit programs have been extended to October 23, 2021, including, but not limited to, the Canada Emergency Rent Subsidy, Lockdown Support, and the Canada Recovery Benefit.
Establishment of CRHP
The new CRHP, which will be available until at least November 20, 2021, is aimed at encouraging employers to both hire additional employees and give existing employees more hours as the country recovers from the pandemic.
The CRHP, which is retroactive to June 6, 2021, will provide eligible employers with a subsidy of up to 50% of incremental remuneration paid to eligible employees.
Eligibility for Employers
For employers, eligibility criteria for the CRHP are substantially similar to the requirements of the CEWS, with certain additional conditions applying to partnerships and for-profit corporations:
- the employer must be a Canadian-controlled private corporation;
- the employer must be a cooperative corporation eligible for the small business deduction; or
- if a partnership, at least half of the interest in the partnership must be held by employers who are eligible for the CRHP.
Any drop in revenue relative to pre-pandemic levels is sufficient to qualify for Period 17, which is June 6, 2021 to July 3, 2021. Qualification for subsequent periods requires employers to demonstrate a revenue decline of more than 10%, calculated by:
- comparing revenue in the current calendar month to revenue in the same calendar month, pre-pandemic; or
- comparing monthly revenues relative to the average of revenues from January 2020 and February 2020.
Employers are required to use their chosen method throughout each period. Employers who have previously collected CEWS must use the same revenue calculation method when applying for CRHP. This same rule applies for employers who will or already have elected to use the accrual method in calculating their revenue over the cash method, and vice versa.
Eligibility for Employees
Eligible employees include those who were actively employed by an eligible employer throughout at least a portion of the respective period, measured in single weeks. Employees must have been “primarily” employed in Canada to qualify. Notably, remuneration paid to furloughed employees is excluded from the CRHP subsidy, though employees on paid absences such as vacation leave, sick leave, or sabbatical are still eligible.
The amount of subsidy available under the CRHP will gradually decline over the course of several periods. Beginning at 50%, the subsidy rate will decline to 40% as of August 29, 2021, 30% as of September 26, 2021, and 20% as of October 24, 2021.
Until August 29, 2021, employers can also claim 100% refunds for contributions made for a week on behalf of any eligible employees with respect to:
- Employment Insurance;
- the Quebec Parental Insurance Plan;
- the Canada Pension Plan; and
- the Quebec Pension Plan.
Calculating Incremental Remuneration
Incremental remuneration is the difference between the total eligible remuneration paid to eligible employees during the qualifying period and the total eligible remuneration paid to them during the baseline period.
Baseline remuneration is defined as the average amount of eligible remuneration an employee received in a week before March 15, 2020. Employers have multiple pre-March 15, 2020 date ranges they can choose from when calculating baseline remuneration, which can be found here. Eligible employees who did not work for the employer prior to March 15, 2020 should be assigned a baseline remuneration of $0.
Eligible remuneration includes:
- certain taxable benefits;
- fees and commissions.
Eligible remuneration does not include:
- severance pay;
- stock option benefits;
- tips given directly to employees by customers;
- non-cash taxable benefits, such as personal use of a company vehicle.
CRHP & CEWS
Employers cannot collect both CRHP and CEWS within a single period. Rather, employers are encouraged to apply for whichever program will grant them the greater subsidy. The federal government has provided a calculator to aid employers in making this determination.
Applications for both programs are due no later than 180 days after the end of the period that is being applied for.
Takeaways for Employers
Employers seeking to benefit from these subsidy programs should consider recalling, hiring, or increasing the hours of employees as soon as possible to maximize their benefit, given that the subsidy rate for both programs will decline over time.
Any employer that plans on recalling or hiring employees should carefully revisit and revise their social distancing guidelines for the workplace as necessary before they increase the number of employees that will be present in the workplace. This should include hygiene requirements, and an assessment of whether workstations need to be (and can be) moved to ensure that employees are sufficiently distanced from one another. Failure to do so could put the health of employees and the community at risk and expose the employer to liability under the Occupational Health and Safety Act and the Emergency Management and Civil Protection Act.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.