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COVID-19: Further Updates to the Canada Emergency Wage Subsidy Announced

Practice Areas: Human Resources Support

On March 27, 2020, the government of Canada announced that it will offer a wage subsidy of up to 75% for qualifying businesses, backdated to March 15, 2020. You can read CCPartners’ previous blogs on that announcement here and here.    

This morning, Prime Minister Trudeau announced further updates to the Canada Emergency Wage Subsidy (“CEWS”) aimed at addressing concerns raised by the business community since the program was announced.

As outlined in our last blog, eligibility for the CEWS was limited to businesses who have seen a 30% revenue decrease due to COVID-19 when compared to the same month in 2019.  Revenue means revenue from business carried on in Canada earned from arm’s-length sources, calculated using the employer’s normal accounting method, and excluding extraordinary items.

The updated eligibility criteria will allow some business, for example start-ups and new businesses, to calculate their lost revenue in comparison to January and February of 2020. Further, noting that most businesses only felt the full impact of the COVID-19 pandemic mid-way through the month, businesses will only need to show a 15% decline in March to be eligible. The threshold for April and May remains at 30%.

We previously noted that most employers will not be disqualified just for receiving some public funding, and predicted that non-profit organizations and registered charities are specifically eligible. Today’s announcement confirmed that charities will be permitted to elect whether or not to include government revenues in calculating lost revenue for the purposes of the CEWS.

The draft legislation also reportedly provides for some flexibility so that eligibility for the CEWS is not impacted by, for example, a large irregular expense or income. For employers who had counted themselves out of the CEWS based on March revenue calculations, this announcement is sure to be welcome news and may impact decisions about the necessity of temporary layoffs.

Further updates to the interest-free loan program for small businesses are also expected with some sources indicating that applications for same may open as soon as Thursday.

As the full legislation has not yet been released, certain questions remain for employers: Do I have any productive work for my employees?  How many of my employees can I have working?  What can I do if my business is eligible for the Canada Emergency Wage Subsidy, but my employees would benefit more from collecting CERB? As always, the team at CCPartners will continue to monitor the situation and update our readers and listeners through our COVID-19 blog and podcast series.




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