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April 2, 2020

Update on the Canada Emergency Wage Subsidy and Canada Emergency Response Benefit

Authors Hendrik Nieuwland, Todd Weisberg, Brandin O'Connor and Domenica Moran

Canada Emergency Wage Subsidy (CEWS)

Last week, the Federal Government announced it would provide the CEWS, a 75% wage subsidy for any business, charity or non-profit that has suffered a 30% decline in revenue due to COVID-19, which we previously discussed here.  Today, more information was released by a team led by Minister of Finance Bill Morneau, as follows: 

  • How is the 30% revenue decrease measured?  Businesses must compare their current revenues to those in the same month last year.For example, businesses would need to compare their revenues from March 2020 to their revenues in March 2019 to show a decline of at least 30%.The CEWS will be available for March, April, and May 2020, and businesses will have to re-apply each month.


  • How do businesses apply?  Businesses will be able to apply via an online portal through the Canada Revenue Agency (CRA) in approximately 3 weeks.Funds should be made available to qualifying businesses in approximately 6 weeks, and will be paid by cheque or direct deposit.


  • Can the CEWS subsidy be the only wages employees receive?  This appears to be the case.Finance Minister Morneau urged businesses to pay their employees their remaining 25% of wages if possible, but when asked directly he did not say there was any requirement to do so in order to qualify for the subsidy.


  • Does the CEWS replace the 10% Temporary Wage Subsidy for Employers?  No.The 10% wage subsidy (which we discussed here) is a three-month measure that allows eligible businesses to reduce their payroll deductions by 10% up to $1,375 per employee to a maximum of $25,000.The 75% wage subsidy will not be administered in the same way.To receive the 75% wage subsidy, businesses would have to provide proof of their employees’ pre-COVID-19 wages, and provide proof they paid their employees at least 75% of those wages (to a maximum of $847 per week).Once this is established, the subsidy will be provided by the CRA.


Minister Morneau did promise that further details would be provided shortly.


Canada Emergency Response Benefit (CERB)

Today Prime Minister Justin Trudeau announced more details on the CERB, which we previously discussed here.  Canadians can apply for the CERB via an online portal on April 6, 2020.  A detailed information page on the CERB is available on the Federal Government’s website here.  Some of the key highlights are set out below.


  • Eligibility criteria – Applicants must:


    • reside in Canada,
    • be at least 15 years old,
    • have not voluntarily quit working,
    • have stopped working because of COVID-19 or for reasons that make them eligible for Employment Insurance (EI),
    • had an income of at least $5,000 in 2019 or the last 12 months, and
    • have been, or expect to be, without income for at least 14 days in the initial 4-week period, and have no income thereafter.


  • Duration and amount of CERB benefits – Applicants will receive $500 per week between March 15 and October 3, 2020.The benefits are taxable.


  • Coordination of CERB and EI – Applicants cannot receive both CERB and EI benefits at the same time.The following coordination rules will apply:


    • If the applicant is currently receiving EI, the applicant will continue to receive EI until the end of the benefit period.If the applicant’s EI benefits end before October 3, 2020, they can apply for the CERB.


    • If the applicant has already applied for EI and became eligible before March 15, 2020 (because they stopped working before March 15, 2020), the applicant will receive EI benefits.


    • If the applicant has already applied for EI and became eligible on or after March 15, 2020 (because they stopped working on or after March 15, 2020), the applicant will receive CERB benefits.


  • Payment of CERB benefits – Applicants must choose whether to receive the CERB by mail or by direct deposit.Those who choose to receive a cheque by mail will receive it within 10 days, while those who choose direct deposit will receive payment within 3 to 5 days.After applying for the CERB, Applicants must confirm they do not have a job once a month to continue receiving this benefit.


Prime Minister Trudeau indicated that workers who are going to receive the 75% wage subsidy (CEWS) cannot also receive the CERB.

Our firm will continue to provide you with updates as the Federal Government’s response to the COVID-19 pandemic evolves.

The foregoing is for informational purposes only and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of SOM LLP’s lawyers by email or telephone.

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