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COVID-19: Federal government creates a wage subsidy to curb layoffs

April 20, 2020
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In order to help Canadian entrepreneurs keep their employees on the payroll even though their business is closed or its activities have slowed down during the health crisis, Ottawa proposes to reimburse up to 75% of their total payroll. This could represent up to $847 per week, per employee.

To be eligible for the Canada Emergency Wage Subsidy (CEWS), employers will need to attest to a reduction of at least 15% in gross revenue for March and at least 30% for April and May 2020. This reduction can be determined based on either the previous year, or the average of revenues earned in January and February 2020, provided they keep the same approach for each subsidy request. To calculate the revenues earned, they have the option of using the accrual method or the cash method.

Entrepreneurs will need to apply for this subsidy via the Canada Revenue Agency’s My Business Account portal and keep records to attest to the reduction in revenues and remuneration paid to their employees. Finance Minister Bill Morneau promises to create a web portal for the transmission of subsidy applications within two to five weeks, without, however, providing a date when owners could expect to receive the reimbursement.

Rehiring incentive
In creating the CEWS, the federal government wishes to limit lay-offs. Their hope is that businesses will have the necessary resources to essentially resume their regular activities, or to assign new temporary tasks to their personnel, such as the elaboration of a recovery plan; or to continue paying their employees even if operations have been suspended.

 “If you have laid off employees, we hope that you will consider rehiring them with this wage subsidy,” – Justin Trudeau during the press conference announcing the support measures, held on March 27, 2020

To help businesses cope as they wait for the wage reimbursement, Ottawa is freeing up liquidity through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). In all, $65 billion will be provided to private lenders to facilitate access to credit.

Certain eligible owners will be able to fall back on the Canada Emergency Business Account (CEBA), a temporary program providing interest-free credit of up to $40,000 until December 31, 2022. Countrywide, the provincial authorities are supporting the federal government’s financial aid efforts by freeing up funds to support businesses that are trying to keep their employees on the payroll.

At Nethris
Like the government authorities, Nethris encourages businesses to keep paying their employees or to rehire them if they have the necessary resources to do so. An employee is an investment; they must be recruited, welcomed, trained, and equipped to contribute to SME profitability. In our eyes, each employee is a valuable resource with the skills a business requires to resume its activities quickly and effectively.

Taking advantage of these subsidies means contributing to the prosperity of the Canadian economy. In these difficult times, we wish to express our heartfelt admiration for all employers.

Are you a Nethris client? Here is how you can rehire your employees online. For all the information you need at your fingertips during the crisis, we invite you to refer to the COVID-19 web page.