The Canada Emergency Wage Subsidy (“CEWS”) has gone through various changes since the program was first established in March 2020, and notable changes and clarifications have been enacted and/or announced recently. On November 19, 2020, Bill C-9, An Act to amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy) (“Bill C-9”) received Royal Assent which, among other things, extended the CEWS and broadened the program’s eligibility criteria (for further information on Bill C-9, please read our recent blog). On November 23, 2020, the federal government updated its Frequently Asked Questions (“FAQ”) web page to provide important clarification regarding eligible remuneration under the CEWS. Finally, on November 30, 2020, the federal government released its Fall Economic Statement which proposes further changes with respect to the amount of the CEWS for upcoming claim periods. We have summarized these changes and clarifications below.
Changes in Effect Under Bill C-9
- Extension of the CEWS: Bill C-9 extended the CEWS until June 30, 2021. Accordingly, the application deadline is now the later of (i) January 31, 2021 and (ii) 180 days after the end of the particular qualifying period.
- Broadened eligibility criteria: Bill C-9 broadened the definition of “eligible employee” for the purposes of the CEWS. In particular, eligible employers are now able to claim the CEWS for the wages of employees who are employed primarily in Canada throughout the qualifying period or a portion of the qualifying period.
- Confirmation of subsidy rates for periods 8 to 10: Bill C-9 confirmed that the CEWS will continue to cover up to 65% of eligible employee wages, or remuneration, with a maximum base subsidy rate of 40% and a maximum top-up subsidy rate of 25%, for period 8 (September 27 to October 24, 2020), period 9 (October 25 to November 21, 2020), and period 10 (November 22 to December 19, 2020).
Clarification Provided under the Updated FAQ
- Salary continuation may be eligible remuneration: The updated FAQ clarifies that salary continuance payments to employees who are being dismissed will generally be considered eligible remuneration for purposes of the CEWS, so long as certain employment benefits (e.g. pension benefits) are continued throughout the salary continuance period. However, employees receiving salary continuance payments will not be considered to be on leave with pay for purposes of determining the CEWS subsidy rate that applies to them. On the other hand, pay in lieu of notice of termination paid to dismissed employees will not be eligible remuneration for the purposes of the CEWS where it is paid as a lump sum and/or where certain employee benefits are not continued for the duration of the notice period.
- Supplementary Unemployment Benefit plan (“SUB Plan”) payments may be eligible remuneration: The updated FAQ clarifies thatwhen SUB Plan benefits are paid to employees by the employer directly, rather than through a trustee, such payments will be considered eligible remuneration for purposes of the CEWS.
Changes Proposed by the Fall Economic Statement
- Increased top-up subsidy rate for periods 11 to 13: The federal government, in its Fall Economic Statement, proposed to increase the maximum wage subsidy rate to 75% (from 65%) for period 11 (December 20, 2020 to January 16, 2021), period 12 (January 17 to February 13, 2021), and period 13 (February 14 to March 13, 2021). While the maximum base subsidy would still be 40%, the top-up wage subsidy rate would increase to 35% (from 25%).
As always, we will continue monitoring developments regarding the CEWS and will post further updates as they become available.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.