Temporary Wage Subsidies for Businesses in Canada

The government of Canada is issuing two different wage subsidies to help businesses maintain and/or rehire employees and persevere through the pandemic. Below is a breakdown of both:

  Type 1 Type 2
Type of Wage Rate Subsidy 10% Wage Subsidy 75% Emergency Wage Subsidy (CEWS)
Subsidizes 10% of gross pay up to $1,375/employee and $25,000/employer 75% of gross pay for first $58,700, up to a max of $847/week per employee
Eligibility All Canadian private small businesses paying wages in the period All Canadian businesses that can prove a 15%/30% revenue drop
Qualifying Period March 18 - June 19 March 15 - June 6
How it's Paid Through a reduction in income tax remittance through your payroll provider Through a CRA portal application and subsequent direct deposit credit
How to Set it Up Contact your payroll provider TBD but will need to go through CRA portal
When to Apply Now. Retroactive application for whole period Mid-May is expected timeframe. Retroactive application for whole period available
COVID-19 HR Preparedness Test

At Pro HR, we want to help small businesses thrive, even during a pandemic. This study will measure how prepared your workforce is, from an HR standpoint, for weathering the COVID-19 storm. In the end, you will know which areas of HR you need to focus on to ensure the viability of your business and the engagement of your employees to get you through the pandemic. We are offering a FREE 30-minute consultation for every participant of this survey.

Pro HR's COVID-19 Preparedness Study
COVID-19 Guide for Employees and Employers
Published on March 28, 2020 by Deborah Sikkema
I. For Employees:

How do I obtain financial support if I lose my job because of COVID-19?

Depending on your situation, you may be entitled to Employment Insurance (EI), the Canada Emergency Response Benefit (CERB), or both. To help clarify when to apply for one or the other, criteria for each are explained below.

The CERB includes financial assistance of up to $2,000/month for up to four months. You cannot apply for this benefit until the website is up and running, which is anticipated to be on April 6th. The CERB is intended for anyone whose work is affected by COVID-19, including those who:

  • Have been quarantined,
  • Are laid off,
  • Are sick,
  • Are taking care of someone who is sick with COVID-19, or
  • Are a working parent who needs to stay home without pay to take care of kids who are sick or because of school or daycare closures.
CERB was designed for people who don’t qualify for EI but need help, including part-time employees, gig workers, and freelancers. For further information on the CERB and other Canada’s COVID-19 Economic Response Plan in general, click HERE.

EI is intended for workers that have paid into the employment insurance program, have been out of work for at least seven days in a row, and have worked the minimum number of hours (between 420 and 700 depending on where you live). For more details on EI, click HERE. Sick benefits through EI are also a possibility for new applicants who are in quarantine, and the government has waived the one-week waiting period in such cases.

If I qualify for both, which one should I choose? Since EI has a maximum of 55% of your income, capped at $573/week, it is the better choice if you make $54,000/year or more. For those who earn less than this, the CERB is the better choice. For example, if you earn $30,000/year, under EI, you would earn $317/week versus $500 under the CERB. Then when the CERB runs out, you can still apply for EI.

What if I am still working but am working less?

If your hours have been reduced, you can still apply for EI or the CERB, but you will need to claim your earnings, which will then be deducted from your benefit.

Job Support:

For assistance with your job search, there are a number of resources available to you. Some of these are listed below.

  1. For overall job search assistance: https://www.ontario.ca/page/employment-ontario
  2. Partnering with a staffing agency: https://www.clearlyrated.com/staffing/on-can/toronto-on
  3. For hospitality and retail staff or employers looking for the same: https://hyr.work/

II. For Employers:

What financial assistance can I get to help keep my employees on payroll?

The federal government is providing eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. For more information on this, click HERE.

What if I need to temporarily shut down all or part of my business?

When determining whether to shut down all or part of your business, you need to consider which roles are the most important for running your operations. If you have a business continuity plan, refer to this to determine what those key roles are. Roles that are not pertinent for business continuity can likely be managed through other means, temporary layoffs being one of them. Ensuring that you have a comprehensive plan around this is important, as there are always risks when employees are laid off.

In terms of the legalities around layoffs, the rules differ between provinces and federally, but for Ontario, it is possible to implement a temporary layoff. A temporary layoff is not a termination or severance of employment as per the Employment Standards Act, 2000 (ESA). A temporary layoff is defined as a period of 13 weeks in a 20-week period OR 35 weeks in a 52-week period where an employer continues benefits. Under the ESA, employees who are temporarily laid off are not entitled to termination or severance pay. You do not need grounds to implement a temporary layoff, unless it is explicitly written in an employment agreement or collective agreement. The risk of invoking a temporary layoff is that employees in non-union environments could choose to treat the temporary layoff as constructive dismissal, unless their employment agreement permits it.

Can I require employees to use vacation days to cover their absence from work?

In general, employers in Ontario have a right to determine when an employee can take vacation; however, the particular right is dependent on what is written in an employment agreement, policy, collective agreement, or practice.

What if an employee refuses to come into work because of fears related to COVID-19?

According to the Ontario Occupational Health and Safety Act, employees have a right to refuse unsafe work, which includes the potential of being exposed to a virus. The refusal to work, however, must be reasonable. Where an employee exercises this right, the supervisor/manager must investigate and attempt to resolve the issue. While the investigation is taking place, the employee would remain in a safe place. If the issue is not resolved, the matter will be escalated to an inspector from the Ministry of Labour. No other employee is allowed to work in the area pending the outcome of the investigation, unless that employee is advised of the situation and still consents to work there.

How do I manage employees who are now working from home?

During this unprecedented time, it is important to remember that in some cases, employees are not only working from home, but they are taking care of dependents (children or elders). It is even more important now than ever to provide flexibility so that your employees can balance and manage their priorities. Having said this, it is also important that the work continues to be completed. Here are some key considerations to think of when managing remote workers:

Prior to even managing employees, they must have the proper set-up in their home in order to complete the work. Take a tally on what resources each employee has to ensure that they are set up for success.

  • Do your employees know what is expected of them while working from home (i.e., specific protocols, such as when meetings will be held and how, how the work will get done, what if anything has changed re: work output)?
  • Ensuring that you are communicating with your employees frequently enough. Remember that knowledge is power.
  • How will you measure employee performance remotely?
  • How will you manage performance challenges? In some cases, employees may not be able to perform what was expected of them prior to working remotely due to a increase in obligations, so these expectations may need to be modified. In other cases, more guidance may be required on time management and productivity. Or, a reduction in hours may be an option.
  • How will you keep your teams connected and engaged?

There are many facets to consider when managing employees remotely. The points above at least provide a starting point.

What other options can I provide my employees with besides layoffs or working from home?

  • In some cases, employees could obtain EI through taking another statutory leave of absence (e.g., Family Caregiver Leave).
  • Voluntary layoffs: you could ask your employees to come forward and volunteer to take an unpaid leave of absence.
  • Reduction in work hours: you could ask if any of your employees are willing to reduce their hours.
  • You could split work teams into two groups and have them alternate the weeks that they work.
  • Supplementary Unemployment Benefit Plan: you have the option to top up EI payments for not only pregnancy/parental leave, but for other leaves of absence as well.