We have heard it repeatedly from the media and our political leaders. These are unprecedented times.
Since the government-ordered shutdown of all businesses and services that were deemed to be non-essential, the financial well-being of millions of Canadian employees – as well as the companies they work for – have been severely impacted. In an effort to address these challenges, governments at the federal and provincial levels have swiftly enacted a variety of legislation directed at employees and employers. The following is a summary of some of these legislative changes.
Closure of Non-Essential Businesses
Ontario Regulation 82/20 is an Order in Council made under section 7.0.1 of the Emergency Management and Civil Protection Act that requires the temporary closure of all non-essential businesses and establishes the list of essential businesses that can remain open. That list, set out in Schedule 2 of this Regulation, may be found here.
The list includes sectors such as supply chains, financial services, telecommunications, transportation services, agriculture, energy, health care and social services. It was last updated and shortened effective April 5, 2020.
For the sake of clarity, subsection 1(3) of the Regulation does not preclude non-essential businesses from operating remotely, providing goods by delivery or pick-up, or providing services online or by phone or other remote means.
Employees who are not affected by the closure of non-essential businesses may be entitled to take an emergency leave from work.
The province’s Employment Standards Act, 2000, was amended to add section 50.1 which now provides for an unpaid leave of absence as a result of a declared emergency under the Emergency Management and Civil Protection Act or an infectious disease like COVID-19. This kind of leave is available to employees who are under medical investigation or treatment for COVID-19 or are looking after a family member as a result of the state of emergency, among other reasons. A link to the legislation may be found here.
This leave is retroactive to January 25, 2020 when the first presumptive case of COVID-19 was discovered. Although the employer may ask for reasonable evidence of the need for the leave, the employee is not required to obtain a medical certificate. It should be noted that there is no fixed duration for such a leave such that it may continue for as long as the state of emergency continues.
Canada Emergency Response Benefit (CERB)
The federal government’s legislative response to the pandemic was the COVID-19 Emergency Response Act. A link to this legislation may be found here.
Part 2 of this Act is the Canada Emergency Response Benefit Act which provides a benefit that we have now come to know as the CERB. This taxable benefit provides $2,000.00 every 4 weeks for up to 16 weeks for workers who have lost income due to COVID-19.
It is available to Canadian-resident workers 15 years old and above who are earning less than $1,000.00 per month and have earned at least $5,000.00 in the last year. The benefit is not available to those who have lost income due to a resignation from employment.
The worker’s circumstances determines how the application for this benefit is submitted. For those who are self-employed, the application for this benefit may be submitted through the Canada Revenue Agency via the link found here. Employees, on the other hand, may apply through Service Canada via the link found here.
Canada Employment Wage Subsidy (CEWS)
For those employers who are able to continue operating, whether at full capacity as an essential business or partially as a non-essential one, their single largest expense is often the wages of their employees. During this pandemic, the federal government has implemented the Canada Employment Wage Subsidy or CEWS to assist employers in managing this expense.
This program is administered by the Canada Revenue Agency under the authority of the Income Tax Act and provides a 75% wage subsidy to employers who are not public bodies such as municipal corporations, universities and colleges, and hospitals.
Covering a period between March 15 and June 6, the CEWS subsidizes the greater of:
- 75% of an employee’s remuneration up to $847.00 per week; and
- the lesser of an employee’s renumeration up to $847.00 per week and 75% of the employee’s average weekly remuneration between January 1 and March 15 (the pre-crisis period).
For example, if an employee’s weekly remuneration is $1,000.00, the CEWS would cover $750.00 which is the lesser of the maximum of $847.00 per week and 75% of $1,000.00 per week (as per paragraph 2 above). By contrast, if an employee’s weekly remuneration is $1,200.00, the CEWS would cover $900.00 being the greater of $847.00 per week and 75% of $1,000.00 per week (as per paragraph 1 above).
Employers benefiting from the CEWS are expected where possible to maintain or top-up to the employee’s pre-crisis remuneration.
In order to be eligible, an employer must have suffered a year-over-year drop in revenue of at least 15% in March and 30% in subsequent months. As an alternative to the corresponding month in 2019, employers may use an average of January and February 2020.
More information about the CEWS program may be found here.
Canada Emergency Business Account (CEBA)
In addition to the CEWS, the federal government introduced the Canada Emergency Business Account or CEBA. This program is implemented by certain financial institutions in cooperation with Export Development Canada (EDC), a corporation wholly-owned by the Government of Canada and authorized by the Export Development Act.
Under the CEBA program, small businesses may apply to their current financial institution for interest-free loans up to $40,000.00 to help cover operating costs. The program is available to Canadian businesses with a federal tax registration and a 2019 payroll between $20,000.00 and $1,500,000.00.
A noteworthy feature of the program is that it also provides for loan forgiveness of 25%, to a maximum of $10,000.00, where repayment is made before the end of 2022.
Details on the CEBA program may be found here.
Again, this is only a summary of legislative changes. As we know, these changes occur rapidly as new programs are announced and rolled out, but I will endeavour to update this article with each significant measure taken by the federal and provincial governments, such as the recently-announced Canada Emergency Commercial Rent Assistance program or CECRA.
This article is intended only to provide general information and does not constitute legal advice. Should you require advice specific to your situation, please feel free to contact me to discuss the matter further.