Canadian employers have an obligation to their payroll employees, but due to the recent COVID-19 pandemic, they may be unable to meet those commitments. With the Ontario Ford government requiring a minimum 14-day shutdown of non-essential businesses that are unable to telecommute, many employers have been forced to lay off their employees to help flatten the curve.
To alleviate a portion of payroll expenses for eligible businesses that remain open, or will re-open after the mandatory shutdown, the government has introduced the Canada Emergency Wage Subsidy. The subsidy will allow qualifying employers to have up to 75% of employee wages reimbursed, with a weekly cap of $847 per employee and for a maximum period of 90 days. This program will provide employee wage subsidies retroactively to March 15, 2020 up to 1,000 employees. The program would be in place for a 12-week period, from March 15 to June 6, 2020. It’s also expected that the employer would make their best efforts to top up the salary to 100% of the maximum wages earned.
The subsidy will cover up to 75% of the first $58,700 earned per employee. This equates to a subsidy of up to $847/week per employee.
Businesses not eligible for this wage subsidy can apply for the previously announced 10% temporary wage subsidy program through the Canada Revenue Agency (CRA).
Who is Eligible for the Canada Emergency Wage Subsidy?
APRIL 8 UPDATE: Businesses now can show a 15% decline in revenue during March compared to the previously announced 30% threshold. Businesses can compare March revenue to January and February 2020.
To help ensure Canadian employers have the financial capacity to bring employees back to work after mandatory non-essential business closures, the eligibility for the Canada Emergency Wage Subsidy has been expanded to include far more employers than the previously announced 10% wage subsidy.
Eligible employers include:
- Taxable corporations; and
- Partnerships consisting of eligible employers, non‑profit organizations and registered charities. Those that see a drop of at least 15% of their revenue in March 2020 and 30% for the following months.
What Does the Application Process Look Like?
Once an approach is selected by the employer on calculations, this approach must be applied throughout the program period of March 15 to June 6. Employers are not able to change their calculation method. Funds will be paid out within 6 weeks and it’s highly suggested to set up direct deposit in CRA’s online portal to facilitate the payments.
The complexity of applying for the Canada Emergency Wage Subsidy will depend heavily on your business’ size and payroll structure. Contact a member of the Mentor Works team for more information, or visit our COVID-19 support page to find additional government funding programs.
Due to the rapid changes in government funding programs related to COVID-19, Mentor Works is hosting weekly webinars to keep Canadian business owners informed about the financial support programs they have available to them. Register for our upcoming COVID-19 Support for Canadian Businesses webinars.
Updated: April 14, 2020.