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Program can minimize business interruptions like COVID-19, rail strike

Thursday, March 12, 2020 @ 8:36 AM | By Gary Rosen and Lisen Bassett


Gary Rosen %>
Gary Rosen
Lisen Bassett %>
Lisen Bassett
Businesses across Canada are still feeling the effects of the recent CN rail blockades that continue to cause delays in the movement of goods. Moreover, the impact of COVID-19 (coronavirus) has seriously impacted the importation of goods from Asia.

Stock markets worldwide are experiencing alarming declines. The Bank of Canada followed the U.S. Federal Reserve and cut its overnight rate target to 1.25 per cent. Economists predict an impending recession, and products and resources that were intended for domestic and international markets have been delayed in our ports and rail system.

As lawyers, we are fortunately or unfortunately, in the business of providing solutions when fears become reality. If your business or a client is experiencing a temporary decline in production levels due to the rail blockades or the spread of the coronavirus, here’s a solution to consider.

The federal Work-Sharing program is offered through the federal government’s Employment and Social Development Canada program, which aims to provide relief to companies experiencing a temporary reduction in their normal levels of business activity (think revenue, sales, production etc.). 

When businesses face financial difficulties, layoffs are often one of the cost-cutting measures employers consider. While reducing personnel might address an employer’s immediate cash flow concerns, employers often permanently lose employees on temporary layoffs who find other means of employment during the layoff period, especially in historically tight labour markets. The permanent loss of personnel is felt acutely by employers, who have invested considerable time and resources into their employees. This “cost cutting” measure can then quickly become, well, costly.

Canada’s Work-Sharing program can assist employers in retaining their employees during a temporary reduction in normal levels of business activity by providing income support for employees eligible for employment insurance.

In order for employers to successfully gain access to the benefits of this program, the consent of the employees is required. Indeed, as part of the program, the employees themselves must agree to reduce their hours equally as a group, which is referred to as a “work-sharing unit.”

Employees who perform similar tasks, have the same job description, or whose work impacts one another may be placed within a work-sharing unit.

Only certain kinds of employers and employees are eligible to benefit from the Work-Sharing program. For employers, only publicly held companies, private sector businesses and not-for-profit organizations are eligible for the program.

Employers must also show the following to be eligible for the Work-Sharing program :

  • Operating a year-round business in Canada (i.e. not seasonal work);
  • Operating for at least two years;
  • Demonstrating a recent decrease in business activity (approximately 10 per cent reduction in sales or production);
  • Demonstrating the decrease is temporary, beyond the employer’s control, and not cyclical; and
  • Submitting and implementing a recovery plan designed to return the Work-Sharing unit employees to normal working hours.

Employers cannot benefit from the Work-Sharing program where the reduction in their business activity is related to a labour dispute (e.g. a strike, lockout etc.), seasonal slowdowns or a recent increase in workforce that they are themselves responsible for.

For the employees, only those who work year-round (full time or part time), who are eligible for employment insurance benefits, and who consent to reduce their normal working hours equally within the work sharing unit are eligible for the Work-Sharing program.

This means that seasonal employees, students hired for a summer or co-op terms, casual or on-call employees and shareholder-employees (who control more than 40 per cent of the voting shares of a company) are not eligible for the Work-Sharing program.

Work-sharing agreements last between six and 26 weeks, with an option to extend by 12 weeks.

Employers must apply for the program or any extensions at least 30 days prior to the requested start date (or end date, in the case of an extension application) of the work-sharing agreement.

The effective transportation of goods nationwide involves elaborate logistical co-ordination of many moving parts. Delays, blockades and quarantines reveal how dependant our Canadian businesses are upon the timely movement of goods. Government programs like the Work-Sharing program can be an excellent resource for employers affected by these disruptions.

Gary Rosen is a labour and employment lawyer at Miller Thomson, whose practice covers all aspects of employment law, as well as traditional labour law matters, such as certifications, collective bargaining and grievance arbitration. Lisen Bassett is a lawyer in Miller Thomson’s labour and employment group. She previously worked as a summer student and did her articles with Miller Thomson.

Photo credit / Feodora Chiosea ISTOCKPHOTO.COM


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