CERB

The CERB has been extended from 16 weeks to 24 weeks for workers who:

• stopped working due to COVID-19 or
• are eligible for Employment Insurance regular or sickness benefits or
• have exhausted their Employment Insurance regular benefits December 29, 2019 and October 3, 2020

The CERB has been the major cash flow solution offered by the federal government for individuals impacted by the COVID-19 crisis. Nearly 8.25 million people have benefited from the program that promises $500 in weekly payments.

Wage Subsidy

The wage subsidy program has been extended until December 19, 2020, but with major changes to the program:

• the subsidy amount will decline over the next 6 months
• the new rules allow all companies with revenue declines to apply;
• the wage subsidy will be more complex with two different subsidies being calculated for each period; and the subsidy will vary significantly depending on the level of decrease in revenue.

The new rules are complex and it is important to understand how your company will be impacted. Here is an overview:

1.For period 4 (which ended on July 4) there is no change to how the plan works. Companies must determine whether revenue is down 30%.  If so, the company qualifies for the subsidy consistent with the methodology in periods 1 to 3 (75% cap up to roughly $3,400 for each 4 week period).

2. For period 5 (July 5 to August 1) and period 6 (August 2-29) the legislation will permit companies to select to use either the old rules or the new rules. The new rules have the following major changes:

• The maximum subsidy decreases, beginning with $2,700 per month in period 5 and 6 and declining gradually to $900 in period 9.  The maximum subsidy continues to be based on the same monthly salary of approximately $4,500 being eligible for the subsidy but with the percentage declining from 60% in periods 5 and 6 to 20% in period 9.

• The subsidy will vary with the percentage decline in revenue. The subsidy will approximate the percentage decline in revenue.  If, for example, revenue is down 15% assume that you will receive a subsidy of approximately 15% for each employee’s first $5,000 a month in salary for the remainder of the year. The actual mechanics give you more than that in the early periods and less in the final periods.

• For companies with revenue declines of over 50% there is an additional subsidy that tops up the above by an additional percentage of up to 25% (called a “top-up subsidy).  The top-up subsidy is calculated by multiplying the percentage decline in excess of 50 by 1.25. If, for example, revenue is down 60% then the excess of 60% decline over 50% is an excess 10% multiplied by 1.25 leads to an extra 12.5% subsidy.  To add further complexity to the calculations this subsidy is based on 3 months revenue as opposed to the regular subsidy which is based on a month’s revenue.

The impact of the combined subsidies is that for period 5 and 6 companies most severely impacted could receive a subsidy of up to 85%.  That maximum will fall gradually to 45% by period 9.

The rule continues that allows employers to use the immediately preceding periods revenue decline in order to determine current period eligibility.  If for example, period 5 revenue is down 40% and period 6 revenue is down 25% then the period 5 decline can be used to compute the subsidy for period 6.

According to CBC, more than 223,000 employers have applied for the Canada emergency wage subsidy to cover 2.6 million employees across the country.