Feds expanding CEWS coverage

Includes top-up subsidy for employers most adversely affected by pandemic

Feds expanding CEWS coverage
Harder-hit sectors such as food services may be eligible for top-up subsidies.

The federal government is planning to extend the cutoff for the Canada Emergency Wage Subsidy (CEWS) program and expand its coverage to more Canadian workers.

The government is proposing a further extension of the CEWS, until Dec. 19, 2020, providing proposed program details until Nov. 21, 2020

Effective July 5, 2020, employers that have been affected by the COVID-19 are eligible for a base CEWS amount for active employees. This would be a specified rate, applied to the amount of remuneration paid to the employee for the eligibility period, on remuneration of up to $1,129 per week.

The subsidy will also be accessible to employers with a revenue decline of less than 30 per cent and provide a gradually decreasing base subsidy to all qualifying employers.

“This would help many struggling employers with less than a 30-per-cent revenue loss get support to keep and bring back workers, while also ensuring those who have previously benefited could still qualify, even if their revenues recover and no longer meet the 30-per-cent revenue decline threshold,” says the government.

The CEWS provides a subsidy of 75 per cent of an eligible employee's weekly earnings to a maximum of $847 per employee per week.

Top-up subsidy
The government also plans to introduce a top-up subsidy of up to an additional 25 per cent for employers that have been most adversely affected by the pandemic, specifically for employers in industries that are recovering more slowly.

The proposals would also ensure employers that have already made business decisions for July and August would not receive a subsidy rate lower than they would have had under the previous rules, and address certain technical issues identified by stakeholders.

“We are ensuring that Canadians are able to get back to work as quickly as possible,” says Bill Morneau, minister of finance. “The adjustments we are proposing would ensure that the CEWS continues to address Canadians’ needs while also positioning them for growth as economies continue to gradually and safely reopen.”

Feedback from employers
The proposed changes follow consultations with business and labour representatives on potential adjustments to the CEWS program aimed at ensuring that it continues to protect jobs and promote growth.

Several opinions were expressed, including concerns about a “cliff effect” caused by the elimination of support at the 30-per-cent revenue drop threshold in the current CEWS design. This could “induce inefficient decisions, in addition to being unfair,” says the government in summarizing comments, and many suggested that an effective way to deal with this would be to provide for a gradual reduction in the CEWS rate as revenues increase.

Some employers also said that the current 30-per-cent revenue decline test too stringent and businesses that experience revenue drops of less than this amount may still be heavily affected by the pandemic. Other employers are worried that the current 12-week extension until Aug. 29 may not be enough to help businesses that continue to struggle given the uneven impacts across economic sectors.
In addition, all firms that qualify are treated the same way, but some may require more help especially hard-hit sectors, such as food service.

Sodexo has hired back laid-off employees through the program. Since its launch, about three million Canadian employees have had their jobs supported through the CEWS, and that number continues to grow, says the government.

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