In our other recent posts on COVID-19, we discussed specific leaves for COVID-19, general statutory leaves of absence, work sharing programs and effecting a temporary layoff in the workplace.
All of these considerations prompt the question, what happens to employee compensation?
Most forms of statutory leave under existing employment standards legislation are unpaid. Employers have the option to continue all wages/salary during a leave, but that may not be feasible.
In this article, we discuss some federal options for assisting employees and their families financially during the COVID-19 pandemic. It should also be noted that several provincial governments have also released new forms of support for workers.
The Canada Emergency Response Benefit
Initially, the Federal Government introduced an Emergency Care Benefit; however, further and revised measures were recently announced to provide temporary income support for workers.
On March 25, 2020, the Federal Government announced the Canada Emergency Response Benefit (“CERB”). This taxable benefit will provide $2,000.00 a month for up to four months for workers who lose their income as a result of COVID-19. The intent of this change is to create a simpler and more accessible combination of the previously announced Emergency Care Benefit and Emergency Support Benefit. The CERB is intended to assist all Canadians who have ceased working due to COVID-19, whether EI-eligible or not.
The CERB will apply to:
- workers who must stop working due to COVID-19 and do not have access to paid leave or other income support;
- workers who are sick, quarantined, or taking care of someone who is sick with COVID-19;
- working parents who must stay home without pay to care for children that are sick or need additional care because of school and daycare closures;
- workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work; and
- wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for EI.
The portal to apply for the CERB will be available in April 2020. Eligible Canadians could begin receiving their CERB payments within 10 days of the application. The CERB will be paid every four weeks and will be available from March 15, 2020 until October 3, 2020. The Federal Government has advised that those already receiving EI regular and sickness benefits should not apply for the CERB.
Notwithstanding the introduction of the CERB, the Federal Government still intends to implement other previously announced measures, including:
- a one-time special payment by May 2020 to families of low and modest income through the Goods and Services Tax Credit. The average boost to income for those benefitting from this measure will be close to $400.00 for single individuals and close to $600.00 for couples; and
- an increase to the maximum annual Canada Child Benefit payment amounts for the 2019-2020 benefit year by $300.00 per child.
There is also funding being allocated to targeted groups who may be more vulnerable to the effects of COVID-19 such as First Nations, Inuit and Metis Nation communities, individuals currently repaying their student loans, women’s shelters, sexual assault centres and people experiencing homelessness during the COVID-19 outbreak.
For more details on Canada’s Economic Response Plan, please refer to the Federal Government’s webpage.
On March 27, 2020, the Federal Government announced the introduction of a 75% wage subsidy (calculated on income tax withholding only) retroactive to March 15, 2020.
On March 30, 2020, Prime Minister Justin Trudeau announced some additional details with respect to this wage subsidy, although there are still several points requiring clarification which we anticipate will be announced shortly by the Ministry of Finance. The following points were addressed on March 30, 2020:
- If a business’s revenue has decreased at least 30% due to COVID-19, the business is eligible for a subsidy. There is a lack of clarity on how businesses will be required to prove they have seen a 30% decline in revenue and what criteria will apply.
- The number of employees does not determine eligibility.
- The subsidy will apply to non-profit organizations, charities, and companies regardless of size.
- The Government of Canada will provide a subsidy up to 75% on the first $58,700.00 earned by an employee, meaning up to $847.00 per week unless an employer tops up any salary exceeding $58,700.00 from the business’ own funds. How all of this will be calculated and paid (e.g. payroll deduction, cheque, etc.) is unclear at this time.
Employment Insurance Sickness Benefits
EI sickness benefits provide up to 15 weeks of income replacement and are available to eligible claimants who are unable to work because of illness, injury or quarantine. This allows employees time to restore their health and return to work. Canadians quarantined due to COVID-19 are eligible to apply for EI sickness benefits.
The normal one-week waiting period for EI sickness benefits will be waived for new claimants who are quarantined due to COVID-19 so they can be paid for the first week of their claim. Priority EI application processing will apply for EI sickness claims due to quarantine and those individuals will not have to provide a medical certificate in order to qualify. Employees who cannot complete their claim for EI sickness benefits due to quarantine may apply later and have their EI claim backdated to cover the period of delay.
More information, including eligibility requirements, can be found at Employment and Social Development Canada's (ESDC) webpage discussing COVID-19.
Regular EI Benefits
If an employee does not qualify for EI sickness benefits, they may still qualify for regular EI benefits in the normal course or the CERB (discussed above). More information is available at ESDC's webpage on EI Regular Benefits.
Can Employees Work while in Receipt of EI Benefits? Are there deductions?
If an employee works while receiving EI (sickness or regular) benefits, the employee is able to keep $0.50 of the EI benefits for every dollar they earn, up to 90% of the weekly insurable earnings used to calculate their EI benefit amount (earnings threshold). If they earn any money above this threshold, ESDC will deduct those amounts dollar for dollar from benefits.
A detailed chart explaining what constitutes earnings (and thus subject to deductions) is outlined on the ESDC's website: Employment Insurance Earnings Chart.
The following types of income have no impact on EI benefits as they are not considered earnings:
- disability benefits;
- survivor or dependent benefits;
- worker's compensation benefits paid under specific regulations;
- additional insurance benefits paid under an approved private plan (for example, payments for pain and suffering or medical expenses that received from an insurance company after an employee has been injured in a car accident);
- additional sickness benefits paid by an employer from a registered supplemental unemployment benefit plan (as long as the income, benefits, and additional amounts combined do not exceed 95% of the weekly earnings) – see below for more information on these types of plans;
- sickness or disability payments received under a private wage loss replacement plan; and
- retroactive salary increases.
What is a Supplemental Unemployment Benefit (SUB) Plan? How can it help employees during the COVID-19 pandemic?
Employers can use a SUB plan to increase their employees' weekly earnings when employees are unemployed due to a temporary stoppage of work, training, illness, injury or quarantine. Payments from SUB plans that are registered with Service Canada are not considered earnings and are not deducted from EI benefits.
SUB plans are registered by Service Canada through the SUB program. To accommodate employers during this time and due to the massive influx of applications received, Service Canada is deeming SUB plans approved as of the date of registration. The plan is subject to review by officers in the SUB program.
More information about registering a SUB plan is available at ESDC's webpage.
To learn more about workplace strategies for communicable illnesses and handling COVID-19 in your workplace, including federal and provincial programs that may be available to workers and businesses, please contact a member of Gowling WLG's Employment, Labour & Equalities Group.