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Eligibility Requirements for the Canada Emergency Wage Subsidy

We provided our most recent update on the Canada Emergency Wage Subsidy on April 1, 2020. On April 8, 2020, the Government of Canada announced changes which relax the eligibility requirements for the Canada Emergency Wage Subsidy (the “Subsidy”). Those changes are discussed further below. 

Employers will now only have to show a 15% reduction in gross revenues in March 2020, instead of a 30% reduction. Additionally, the reduction in revenue may be calculated based on an alternative approach of comparison of revenue in March 2020 to an average of revenue earned in January and February 2020, instead of to the same month in 2019 (the “year-over-year approach”). This should allow more employers to qualify for the Subsidy particularly those who may not have been in business in March, April or May last year. Employers will have to select the general year-over-year approach or the alternative approach when first applying for the Subsidy and must use the same approach for the entire duration of the program. 

The Government has put together the table below to summarize the claiming periods, required reduction in revenue for each period and the revenue reference period for eligibility:

  Claiming period Required
reduction in
revenue
Reference period for eligibility
Period 1 March 15 to April 11 15%

March 2020 over:

  • March 2019 or
  • Average of January and February 2020
Period 2 April 12 to May 9 30%

April 2020 over:

  • April 2019 or
  • Average of January and February 2020
Period 3 May 10 to June 6 30%

May 2020 over:

  • May 2019 or
  • Average of January and February 2020

In order for an eligible employer to receive the Subsidy for an employee, the employee must not have been without remuneration for more than 14 days in the eligibility period. This means that if an employee was laid off on March 15, 2020, has not received remuneration since that date, and was not called back to work on or before March 30, 2020, the employer will not be able to receive the Subsidy for that employee for Period 1. Previously terminated or temporarily laid off employees who did not receive any remuneration for more than 14 days can become eligible for the Subsidy if they are recalled to employment (for terminated employees) and receive some remuneration for more than 14 days in a given eligibility period.

Information provided by the Government regarding the calculation of revenue in determining eligibility for the Subsidy also specifies the following:

  • Registered charities and non-profit organizations can choose to include or exclude government funding when making their calculations for lost revenue;
  • An employer’s revenue for the purpose of the Subsidy is its revenue in Canada earned from arm’s-length sources;
  • Revenue is calculated using the employer’s normal accounting method and excludes revenues from extraordinary items and amounts on account of capital;
  • Employers are allowed to calculate their revenues under the accrual method or the cash method, but not a combination of both. The accounting method selected when first applying for the subsidy will have to be used for the entire duration of the program; and
  •  The amount of the Subsidy received by an employer in a given month will be ignored for the purpose of measuring year-over-year changes in monthly revenues.

The Government also announced expansion of the Subsidy by introducing a 100 percent refund for employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Insurance Plan. The refund covers 100 percent of employer-paid contribution for employees eligible for the Subsidy for each week the employees are on leave with pay and the employer is eligible to claim for the Subsidy for those employees. The refund is not available for eligible employees that are on leave with pay for only a portion of the week. Further, the refund is not subject to the weekly maximum Subsidy benefit of $847 per employee.

The Government has stated it will be recalling Parliament to pass legislation implementing the Subsidy, so we should have more clarity soon. We will provide further updates as more information becomes available, or contact Christin Elawny at celawny@fieldlaw.com if you have any questions.