Canada Emergency Wage Subsidy Changes: Time Extension, Rates and Top-Up Calculation

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The federal government has extended the Canada Emergency Wage Subsidy (CEWS) to June 2021.  The CEWS provides employers with a percentage of employees’ pay per eligible employee, per week.  The amount an employer gets per employee is based on the employer’s revenue drop.

The CEWS is based on claim periods—each claim period begins on a Sunday and is a specific period of four weeks.  Period 10, for example, is from November 22 to December 19, 2020.

Employers must confirm for each claim period that they are eligible and calculate their subsidy amount according to that period’s rules—the CEWS does not renew automatically for each period.

For periods 8 to 10, the maximum subsidy rate stays at 65%, comprised of a 40% base rate and a 25% top-up.

Starting in period 8, the base rate and the top-up rate are calculated using the same one-month revenue drop.  For periods 8 to 10, for the top-up rate, employers can choose between the one-month revenue drop for the claim period used to calculate the base rate and the previous average drop for the three months prior to the claim period—whichever is more favourable for the employer.

The application deadline is the later of January 31, 2021 or 180 days after the end of the claim period.

Beginning in period 9, the subsidy calculation for employees on a paid leave better aligns with Employment Insurance benefits.

There is an online calculator and a spreadsheet available for download to assist employers to determine the amount of the subsidy employers can receive under the new rules for periods 8 to 10.

Please contact any of the Employment and Labour lawyers of Clark Wilson LLP for further information.

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