HRDC helping Toronto's SARS-stricken hotel industry

Work Sharing agreements allow hotels to keep staff on the job and avoid layoffs
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|hrreporter.com|Last Updated: 07/11/2003

T

he federal government is offering a helping hand to Toronto’s hotel industry, which has been struggling in the wake of the SARS outbreak.

Jane Stewart, the Minister for Human Resource Development, said more than $960,000 in funding has been set aside for 11 Work Sharing agreements with Toronto-area hotels. Stewart said the agreements have helped avert 138 layoffs and involve 410 employees.

“Toronto businesses have been facing tough times and I commend them for their hard work and perseverance,” said Stewart. “These agreements will enable the businesses to retain some of their skilled employees while going through this difficult period.”

As of June 30, there were a total of 55 SARS-related signed Work Sharing agreements in the Greater Toronto area, valued at slightly more than $2 million. In total, the agreements have helped avert 337 layoffs and involve 853 employees. Human Resources Development Canada said additional agreements are currently under consideration.

Rod Seiling, president of the Greater Toronto Hotel Association, praised the government for helping out.

“We are all facing a difficult situation, and this program will certainly help many of our employees who are going through very trying times,” said Seiling.

What is a Work Sharing agreement?

Work Sharing agreements are funded under Employment Insurance. The program is designed to avert temporary layoffs by permitting the payment of EI benefits to eligible workers who willingly agree to work a temporarily reduced workweek.

The program enables employers to retain workers and avoid layoffs during temporary work slowdowns, while allowing employees to maintain their skills. The agreement is a three-way deal between the employer, the employees and HRDC. Agreements can be from a minimum of six weeks to a maximum of 26 weeks. The agreements can be extended, in exceptional circumstances, by up to 12 weeks with the approval of HRDC.

Advantages of the program

According to HRDC, here are the advantages of Work Sharing agreements:

Keeping the skilled workforce intact. When a company faces difficulty beyond its control and is forced to cut back production, it may have only two courses of action: it can either lay off workers or adopt a Work Sharing arrangement until it can resume normal production.

Workers keep jobs. Work Sharing enables employers to face cutbacks while avoiding layoffs. This is done by shortening the workweek by one to three days and paying reduced wages accordingly. For the hours, days and shifts not worked, HRDC arranges for the workers to draw EI benefits, which helps compensate them for the lower wages received from their employer. Thus, the program benefits workers by averting a layoff and by enabling them to retain work skills.

Employers benefit. Many employers have found the program to be preferable to a temporary layoff because valued employees are retained, staff morale is strengthened, and expensive re-hiring and training costs are avoided.

Working in partnership. Work Sharing is a voluntary program through which management and workers must agree to participate and apply together. Company representatives and the workers must sign the application and all resulting agreements with HRDC, and all agreements must be signed before the start date. At any time during the agreement, the employer, the employees, or HRDC have the right to decide whether to terminate it.

A temporary measure. Agreements can last from a minimum of six weeks to a maximum of 26 weeks. This can be extended in exceptional cases for up to 12 weeks with approval by HRDC.

Work reduction must have dropped by at least 20 per cent but not more than 60 per cent of the normal work schedule in the Work Sharing unit.

The employer is responsible for setting up a schedule of work hours and notifying HRDC officials of any changes in the amount of time worked and the number of employees on Work Sharing. The agreements do not affect workers’ right to regular EI benefits if they happen to be laid off after an agreement ends.

No waiting period for benefits. Participants do not have to serve a waiting period for Work Sharing benefits. This is a regular feature of the program, and is not a waiving of the two-week waiting period which is a requirement to receive regular EI benefits. Work Sharing benefits are processed through the EI payment system, meaning the first cheques arrive within a few weeks. To receive Work Sharing benefits, workers must be eligible to receive regular EI benefits.

Calculation of Work Sharing benefits

Under Work Sharing, a person earning $70 per day or $350 for a five-day work week would receive a total of $319 for a four-day work week paid as follows: $280 in wages and $39 (or 55 per cent of $70) in EI benefits. Every two weeks, the employer must verify each claimant’s report card after it has been filled out.

EI benefits are taxable and are subject to the rules and regulations of the Canada Customs and Revenue Agency Act. As well, in certain cases for high-income workers, a portion of the Work Sharing EI benefit may have to be repaid when the annual income tax return is filed. Permanent full- or part-time employees are eligible, and the minimum number of employees in a Work Sharing unit is two. Employees must file a claim for EI and be eligible for benefits.

How can employers qualify for Work Sharing? To be eligible, an employer must have been in business for at least two years. The company must also be able to show that the need for reduced hours is temporary and unavoidable, and not just a seasonal situation. A detailed recovery plan is required outlining how the company intends to return to normal hours of employment in a minimum of six weeks to a maximum of 26 weeks. A Work Sharing agreement can neither be approved nor continued as a result of or during a labour dispute.

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