As a result of COVID-19, many Canadian employers have seen significant drops in revenue in recent months. Following the initial fallout of the global pandemic, the federal government responded by establishing Canada’s COVID-19 Economic Response Plan to insulate Canadian citizens from the negative economic effects plaguing many industries and sectors.
Part of that plan entails the Canada Emergency Wage Subsidy (CEWS), which is designed to protect jobs and help businesses by incentivizing employers to maintain payroll and re-hire workers who were previously laid-off. Eligible employers were qualified according to a 30 percent revenue decline measurement, which made them eligible for a payroll subsidy of 75 percent.
So far, more than three million Canadian jobs have been supported through CEWS. On July 17, a proposal was made to broaden the reach of CEWS so as to increase that number further by providing more targeted support for workers in the Canadian businesses most impacted. While the initial 12-week period for CEWS (March 15 to June 6, 2020) had previously been extended to August 29, these new changes included: extending the CEWS expiry date to November 21, and if necessary, December 19, 2019; expanding eligibility of the subsidy to employers who may have previously not qualified (as per the 30 percent revenue decline measurement); and addressing technical issues that have been identified. On July 27, the proposed legislation was passed by Parliament and implemented.
Under the new program criteria, businesses with any revenue decline will be eligible to receive CEWS. However, rather than being a 75 percent subsidy, the amount will be based on the revenue drop. The extension also introduces a top-up subsidy involving an additional 25 percent for Canadian employers within industries that are recovering more slowly due to the negative impacts of the pandemic. These changes come with a reassurance (for employers that have already made business decisions for July and August) that subsidy rates will not be lower than they would have otherwise received under the previous rules.