This blog is provided as an information service and summary of workplace legal issues. This information is not intended as legal advice.
In response to the COVID-19 pandemic and the closure of non-essential workplaces in provinces across the country, the Canadian government has introduced a number of emergency relief measures aimed at providing support to employees and employers affected by the pandemic. The specific rules and eligibility requirements of many of these measures and relief benefits have changed significantly. Given these changes, employers should be aware of how two of the most significant relief benefits available at this time, the Canada Emergency Response Benefit (“CERB”) and the Canada Emergency Wage Subsidy (“CEWS”), interact with other relief measures relevant to COVID-19. The CERB and its impact on other benefits On March 25, 2020, the Canadian government introduced the CERB, which provides a taxable benefit of $2,000 a month for up to four months to eligible workers who have lost income as a result of COVID-19. On April 15, 2020, the Canadian government announced that it will be expanding the eligibility requirements such that more workers will be entitled to the CERB, including those who earn up to $1,000 per month. For details on the CERB, please see our most recent blog on the expanded CERB eligibility requirements. CERB entitlement during job-protected leave of absence Employees who are not working and are on a job-protected leave under employment standards legislation across Canada, including under Ontario’s Employment Standards Act, 2000 (“ESA”), will in most cases be eligible to receive the CERB during the period of leave. Impact on Employment Insurance (“EI”) benefits Workers that are eligible for EI Regular benefits or EI Sickness benefits are required to apply for the CERB. If a worker applied for EI Regular or EI Sickness benefits on March 15, 2020 or later, the worker’s EI claim will automatically be processed through the CERB. The eligible worker will only receive the $500 weekly CERB benefit for up to 16 weeks, even if they would have otherwise been entitled to a greater amount under EI benefits. If they remain eligible for EI benefits after the end of the CERB benefit period, they can then begin to receive EI benefits at that time. Similarly, if a worker exhausts their entitlement to EI regular benefits between December 29, 2019 and October 3, 2020, the worker can be eligible for the CERB provided they meet the other CERB requirements. Note that eligible workers may continue to apply for and receive EI benefits other than EI Regular and EI Sickness benefits, including Maternity, Parental, Caregiving, Fishing and Work-Sharing benefits. Impact on payments from employer Given the expanded CERB eligibility requirements announced on April 15th, employees will be able to earn up to $1,000 per month in employment or self-employment income and still receive the CERB. During a worker’s first claim for the CERB, the worker cannot have earned more than $1000 in employment or self-employment income for 14 or more consecutive days within the four-week CERB benefit period. For subsequent CERB claims, the worker cannot have earned more than $1000 in employment or self-employment income for the entire four-week CERB benefit period. Employers must note that these changes have only recently been announced and are subject to any further legislative changes and regulations that may be implemented by the federal government. Employers should be cautious in implementing any payments or reduced work arrangements before receiving further clarification from the federal government about this CERB enhancement, as these steps may have an unintended impact on their employees’ eligibility for the CERB. Impact on Supplemental Unemployment Benefits (“SUB”) Plans A SUB Plan is a plan that can be registered by an employer with Service Canada that permits the employer to “top up” EI regular or sickness benefits received by its employees during a period of unemployment due to a temporary stoppage of work, training, illness, injury or quarantine to a maximum of 95 per cent of the employee’s normal weekly earnings. One of the eligibility requirements to receive benefits under a SUB plan is that an employee apply for and receive EI benefits. As SUB plan top-ups can only be used to top up EI benefits (rather than CERB), at this time employers cannot use a SUB plan to top up employees’ CERB benefits. For this reason, employers are currently unable to use SUB plans to enhance the benefits received by most employees who are off work temporarily due to COVID-19, as all employees who stopped working after March 15 will initially receive the CERB rather than EI benefits. However, if employees remain off work for more than 16 weeks and therefore exhaust their entitlement to the CERB, then begin to receive EI benefits, SUB plans could be used at that time to top up those EI benefits. The CEWS and its impact on other benefits On April 11, 2020, the Canadian government passed legislation enacting the CEWS, which provides a 75% wage subsidy to eligible employers for up to 12 weeks from March 15 until June 6, 2020. For details on the CEWS, please see our recent blog. Impact on the Temporary Wage Subsidy for Employers (the “TWSE”) Many employers may now be wondering how the CEWS affects their entitlement to receive the 10% wage subsidy under the TWSE, which was enacted on March 25, 2020. For employers that are eligible for both the CEWS 75% wage subsidy and the TWSE 10% wage subsidy, if the employer applies and receives both benefits, any benefit that is received under the TWSE will generally be deducted from the subsidy amount that is available to be claimed under the CEWS. The CEWS and Work-Sharing EI benefits On March 18, 2020, the Canadian government announced an extension of the maximum duration of the Work-Sharing program for employers affected by COVID-19. The Work-Sharing program allows employers and employees to jointly agree that employees will work reduced working hours while receiving EI benefits to supplement their income during the work-sharing period. Some employers applying for the CEWS may have implemented, or may be considering implementing, a work-sharing plan. Note that for employers and employees that are participating in a work-sharing agreement, any EI benefits received by participating employees through the Work-Sharing program will reduce the wage subsidy benefit that their employer is entitled to receive under the CEWS. Please note that the above represents the interaction of the CERB and CEWS with these other benefits as of April 22, 2020. The Canadian government is likely to continue to make changes that affect these benefits. We will continue to update this Resource Centre to help you stay In the Know.