Compliance Alert: Federal Government Makes 3 Changes to CEWS

The Canada Emergency Wage Subsidy (CEWS) has enabled many businesses to avoid laying off employees despite COVID-19 financial losses. But given the emergency, it was also put together in a hurry. So, now that things have settled down, the federal government has gone back and tied up some of the loose ends, while expanding the scope of the program. Here’s a look at the 3 key changes, which are set out in Bill C-17, tabled by the Assembly on June 10.

1. 12-Week Extension

Before: The CEWS was supposed to last for 12 weeks from March 15 to June 6, 2020. 

Change: The federal government has extended the CEWS for 12 additional weeks and will now end on August 29.   

2. Expansion of Employers Eligible

Before: Employers eligible for the CEWS included individuals, taxable corporations, partnerships between eligible entities, non-profit organizations (NPOs), registered charities and other entities exempt from Part I tax such as unions, regardless of size and sector; but “public institutions,” including certain government entities and municipalities, as well as schools, school boards, hospitals, health authorities and public universities and colleges were not eligible.

Change: The employer eligibility criteria have been expanded to include:

• Partnerships that are up to 50% owned by non-eligible members;
• Certain indigenous government-owned corporations and partnerships;
• Registered Canadian Amateur Athletic Associations;
• Registered Journalism Organizations; and
• Non-public colleges and schools, including arts, driving, language, flight and other schools offering specialized services. 

The changes are retroactive to April 11, 2020 (when the CEWS was first enacted). Result: The newly included organizations can apply for the CEWS for the first qualifying period starting March 15, 2020, as well as any subsequent qualifying periods. 

3. Bigger Payments for Seasonal Employees & Employees on Leave

Before: The maximum CEWS payment an employer can get on an employee is based on the employee’s average weekly “baseline remuneration” from January 1 to March 15, 2020, excluding any period of 7 or more consecutive days without remuneration. This artificially reduced the payments an employer could receive on seasonal employees or employees who were on leave during that period.

Change: Employers can calculate average weekly baseline remuneration using either the January 1 to March 15, 2020 period, or the period beginning March 1 and ending May 31, 2019, also excluding any period of 7 or more consecutive days without remuneration.