Changes to Canada Emergency Wage Subsidy (CEWS)

22. July 2020 0

On July 17 the federal government announced proposed changes to the CEWS to be effective from July 5, 2020.  The CEWS was implemented to help protect jobs by helping businesses keep employees on the pay roll.  It also encouraged employers to re-hire workers who had been previously laid off.  According to the government, since its inception the CEWS has helped support approximately 3 million Canadian employees.  The proposed changes to the CEWS would broaden the reach of the program, continue to protect jobs and help Canadian businesses that are most impacted.  The proposed changes include the following:

  • Extension of the CEWS program until December 19, 2020
  • Broaden eligibility by including employers with a revenue decline of less than 30 percent and providing a gradually decreasing base subsidy to all qualifying employers
  • Introduction of a top-up subsidy of up to 25% for employers that are most adversely affected by the pandemic

The proposed changes will also address technical issues that have been identified with the current legislation. The draft legislation can be found here.

The proposed revision would provide for a CEWS that consists of two parts:

  • A base subsidy which would be available to all eligible employers that are experiencing a decline in revenues, with the subsidy amount varying depending on the scale of revenue decline.  This subsidy applies to active employees, on weekly remuneration of up to $1,129.  The rate of subsidy varies with the amount of revenue decline but has been expanded so that all eligible employers with a revenue decline would now qualify for CEWS support, eliminating the requirement that the employer must have had a revenue decline of at least 30%.  Subsidy amount is determined based on revenue drop with the highest subsidy amount being made available to employers who have experienced a 50% revenue reduction; and
  • A top up subsidy of up to an additional 25% for those employers that have been most adversely affected by the COVID-19 crisis.  Employers that have experienced a 3 month average revenue drop of more than 50 % compared to pre COVID revenue would receive a top-up CEWS rate equal to 1.25 times the average revenue drop that exceeds 50%

The two part CEWS applies only with respect to the remuneration of active employees.  A separate CEWS structure would apply to furloughed employees with the government continuing to refund the employer portion of CPP and EI.  Details of the proposed changes can be found in the government backgrounder found here.

This update was authored by Rose Keith, QC. Looking for more information regarding government assistance in the wake of the COVID-19 pandemic? Contact Rose at rkeith@harpergrey.com or anyone else listed on the authors page.