The Ontario government has announced an emergency shutdown of all non-essential businesses. The decision represents an escalation of steps to contain the spread of Covid-19. Here is a list of businesses that Ontario has defined as essential.
Please note, the shutdown does not prevent your employees from telecommuting or otherwise working from home, where possible.
The speed at which society and the economy is being shutdown has had a devastating impact on business and has forced many employers to temporarily layoff staff. We have summarized some of the funding programs available to help you and your employees during this public health crisis.
i. Changes to EI Benefits
The government has made it easier for people affected by Covid-19 to enroll in EI sickness benefits. Individuals who are sick or who have been directed to quarantine or self-isolate because of Covid-19 as well as parents who must stay home to watch children because of school or daycare closures can apply for sickness benefits without the ordinary one-week waiting period or requirement for a medical certificate. The application is available online.
ii. New Emergency Care Benefit
A new emergency care benefit has been created that will provide biweekly payments of up to $900 for 15 weeks to workers who are sick, quarantined, or caring for a family member and who do not qualify for EI sickness benefits. Parents forced to stay home because of school or daycare closures are also entitled, whether they qualify for EI or not.
The application for this benefit will be available in April 2020 on the CRA website.
iii. Wage subsidies
Employers have also been provided with a temporary wage subsidy that permits employers to withhold a portion of the income tax they would normally remit to the government between March 18 and June 20.
This amount is equivalent to 10% of remuneration paid, to a maximum of $1,375 per employee and $25,000 per employer. The CRA is in the process of updating the full reporting requirements for this subsidy, but it advises employers intending to take advantage of the subsidy to keep records of remuneration paid during the relevant period, the amount of tax deducted and the number of employees. More information can be found here.
iv. Enhanced Work-Sharing Agreements
A Work-Sharing Agreement provides an alternative to dismissing or laying off workers when a business experiences a temporary downturn outside of its control, such as the current situation caused by Covid-19.
Work-Sharing Agreements allow an employer to reduce a group of employees’ work equally and permits these employees to collect EI benefits to top up their reduced income, while being exempted from the ordinary EI repayment obligations.
Work sharing plans require government approval. To qualify, employers and affected employees must agree to the plan and submit an application. Due to the unique and unpredictable nature of the current situation, the government has eased the requirements of the recovery plan that must accompany an application and extended the maximum duration of a work sharing agreement from 36 to 76 weeks.
Instructions on making an application can be found here.
v. SUB Plans
While the federal government has not yet announced any changes to the Federal Supplementary Unemployment Benefit (SUB) Program as part of its response to Covid-19, businesses looking for ways to assist laid off employees should be familiar with this option. A SUB Plan that has been registered with Service Canada allows employers to top-up employees’ EI benefits without those payments being subject to claw back.
SUB Plans are permitted when an employee is collecting EI because of a “temporary shortage of work” or “illness, injury or quarantine.” Under the current rules, a SUB Plan must be submitted to Service Canada and approved before it takes effect. However, given the extraordinary circumstances it is possible that a plan may be approved retroactively and therefore any monies paid to top-up an employees EI benefits will not be treated as income. However, so such policy changes have yet been announced.
The type of information that a SUB Plan must include is listed on the Service Canada website, and includes amount by which benefits will be topped up (i.e. up to 75% of an employee’s regular wage) and confirmation the top-up will be paid each pay as opposed to a lump-sum. Service Canada has posted a sample plan for reference.
Conclusion
One reason for the dislocation we are all experiencing is the unknown in terms of how effective the current measures have been in containing the virus, and how long the shutdown will last. As such, employers are wise to be honest in their communication with employees and develop an operational plan that allows flexibility to respond to the changing circumstances.
Please contact a professional at Persaud Employment Law if you have questions about how to manage your workforce during these difficult times.