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More key considerations for employers managing through COVID-19

Thursday, April 02, 2020 @ 8:43 AM | By Barbara Green and Philip Holdsworth

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Barbara Green
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Philip Holdsworth
COVID-19 is causing the largest disruption to the Canadian economy, potentially in a century. The number of claims for employment insurance the week of March 16 approached one million, dwarfing the 2008 financial crisis in both speed and volume. Business owners across Ontario are looking for ways to temporarily cut costs to protect the long-term viability of their business as customer demand has weakened and supply chains have dramatically slowed.

This the first part of this guide answered the following questions:

1. What do employers need to do to keep employees safe?

2. What are an employer’s options if they need to temporarily lay off employees?

This second part answers:

3. Can an employer establish a workshare program with employees?

4. What government support is available to employees?

Federal government responses to the pandemic are rapidly evolving with new programs being announced on a rolling basis, making it especially important that business owners review the status of the government response and available options with counsel before taking action. 

3. Agreeing to a federal workshare program with employees

The government of Canada has announced changes to the federal work-sharing program as part of its COVID-19 response.

Work sharing is an adjustment program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. The eligibility and application information can be found here.

The new changes allow employers and employees to temporarily reduce their hours to cover downturns caused by COVID-19 for up to a total of 76 weeks and waive the mandatory waiting period for eligibility.

To qualify for the work-sharing program, employers must have been in business in Canada for at least two years; show that the work shortage is unavoidable, temporary and unexpected (and not related to a seasonal downturn); prepare a recovery plan showing how the business will be maintained for the duration of the agreement; not be undergoing a labour dispute; and have the agreement of the employees.

The reduction in work hours can vary from week to week, but must be between 20 per cent and 60 per cent on average, meaning from one to three days a week, for the duration of the agreement, which can last from six to (now 76) weeks.

Employees being proposed for a work-sharing agreement must:
● Be "core employees" (that is, year-round permanent full-time or part-time employees who are required to carry out the everyday functions of normal business activity);
● Be eligible to receive employment insurance (EI) benefits, and;
● Agree to a reduction of their normal working hours in order to share the available work.

Eligible employees can receive regular EI benefits for the days they are not working, and do not have to serve a waiting period.

On March 27, the federal government announced it would be expanding the temporary wage subsidy for businesses it had previously announced, from 10 per cent of employee wages to 75 per cent, on the first $58,700 of an employee’s pay. This means eligible employers could receive up to $847 per week per employee, retroactive to March 15, to keep employees on payroll. At the time of writing the specific details about the implementation of changes to the temporary wage subsidy program had not yet been set out by the government.

4. What support is available to employees?

Employees who are eligible can claim employment insurance during this period of temporary layoff. In response to COVID-19 requirements for EI eligibility are continually being changed by the federal government with new policy announcements being rolled out steadily. Robins Appleby is continuing to track new announcements relevant to employers and business on our website.

Employers should be aware that earnings paid by an employer to an employee while they are collecting benefits under a federal government employment insurance program can be deducted from the benefits they receive. The applicable table of deductible earnings can be found here.

On March 25, the federal government introduced the Canada Emergency Response Benefit (CERB), which will provide $2,000 a month for up to four months for workers who lose their employment due to COVID-19, regardless of eligibility for EI. Employees that have already applied for EI or are already receiving benefits do not need to reapply, and eligible employees can still apply for EI. The CERB portal is expected to be available in early April, with benefits available between March 15 and Oct. 3.

This is part two of a two-part series. Part one: Key considerations for employers managing fallout from COVID-19.

Barbara Green is a commercial litigator and partner at Robins Appleby LLP, specializing in compensation packages for C-level executives. Philip Holdsworth is an associate at Robins Appleby, specializing in civil and commercial litigation.

Photo credit / Bobboz ISTOCKPHOTO.COM

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