Nova Scotia declared a State of Emergency on March 22, 2020 in light of the novel COVID-19 pandemic. Many businesses and employers have been faced with immense challenges in this unprecedented situation, including the possibility of employee layoffs. While this may be an option to consider, we want to let you know that there are other options available. In this blog post, we will summarize some of these options for you and remind you of a few factors to consider respecting layoffs in this uncertain time.
Our Labour & Employment team is here to help with any questions you may have about these options or how they may impact your business.
Canada Emergency Wage Subsidy
The purpose of this benefit is to help businesses keep and return workers to their payroll through the pandemic and enable employers to re-hire workers who they previously laid-off as a result of COVID-19. The benefit provides a 75% wage subsidy to eligible employers for up to 12 weeks, retroactive from March 15, 2020 to June 6, 2020. Eligible employers include individuals, corporations, registered charities, nonprofit organizations and partnerships. To qualify for the subsidy, eligible employers must have experienced a reduction in revenue of at least 15 percent in March 2020, and at least 30 percent in April 2020 and May 2020. Employers can either compare their revenue to the same months from 2019, or to an average of their revenue in January and February 2020.
Click here for more information on the Canada Emergency Wage Subsidy, including a subsidy amount calculator.
10% Temporary Wage Subsidy
Employers who do not qualify for the Canada Emergency Wage Subsidy can apply for this program. This subsidy spans from March 18 to June 19, 2020 and offers a maximum subsidy of $1,375 per employee and $25,000 per employer. You do not need to apply for the subsidy, rather you calculate it when you remit your income tax, CPP contributions, and EI premiums from salary, wages, bonuses and other paid remuneration, as usual. The amount left over after reducing your remittances by 10% represents your subsidy.
For more information, click here.
Changes to Extend the Federal Work-Sharing Program
This program allows employers to retain their staff during difficult financial periods by reducing employees’ normal working hours and sharing the available work while the employer recovers. The government provides a top up through Employment Insurance to supplement the lost income.
The Federal Government has introduced special measures to extend the work-sharing program for employers affected by COVID-19. These measures include increasing the length of a work-share agreement to 76 from the usual 38 weeks, waiving the mandatory cooling-off period between accessing the program, and reducing the requirements to apply.
Click here for more information about the revised Work-Sharing Program.
Loan Guarantee for Small and Medium Enterprises
This program provides credit and cashflow to small and medium-sized businesses. All businesses in these categories that were otherwise financially viable and revenue generating prior to the COVID-19 outbreak are eligible to apply. Businesses can also receive funding through the new Co-Lending Program for Small and Medium Enterprises. Through this program, the Business Development Bank of Canada joins with financial institutions to co-lend funds to eligible businesses. Eligible businesses may obtain incremental credit amounts of up to 6.25 million through the program. Both these programs can be accessed through various financial institutions and credit unions.
Canada Emergency Business Account
This fund provides credit for small businesses to pay for immediate operational costs such as payroll, rent, utilities, insurance, property tax, or debt services for a maximum of $40,000 per business. It is available to Canadian employers with $20,000 to $1.5 million in total payroll in 2019. For loans repaid by December 31, 2022, 25% will be forgiven. If the loan is not repaid by that date, the remaining balance will be converted to a three-year term loan at 5% interest. This program can be accessed through various financial institutions and credit unions.
Canada Emergency Commercial Rent Assistance
The Federal Government has pledged to offer this program to small businesses. It will provide loans and potentially forgive loans to commercial property owners as a way for small businesses to cover rent for the months of April, May and June 2020. Details of this new program are pending as of the time of writing.
If you are still considering layoffs
If you are still considering layoffs, it is important to remember that, despite the current situation, you are required to meet various legal obligations, such the provisions of the Nova Scotia Labour Standards Code and Human Rights Act, or if you are a federally regulated business, the Canada Labour Code and Canadian Human Rights Act. In addition to these statutes, your business may also have contractual and/or common law obligations to your employees. If you operate in a unionized environment, the collective agreement will apply.
The declaration of a State of Emergency in Nova Scotia, along with the various orders issued under the Health Protection Act, may exempt you from certain statutory notice requirements. Whether a business falls within this exception when laying off employees depends on each business’s circumstances.
Employers considering layoffs or terminations of employees are encouraged to seek legal advice to navigate the complex situation we currently face. Our Labour & Employment Team is here to help.
Are you considering recalling employees?
You may be wondering what the return to work for your business may look like as restrictions are gradually lifted. You may be considering recalling employees who were laid-off during the pandemic. There are many things to consider in this process. What are your operational needs? Do you have appropriate health and safety measures in place? What benefits might laid-off employees be receiving and how would these be impacted by a recall? What are your obligations to your employees and to government entities such as Service Canada?
Social distancing requirements are likely to be part of our working lives for some time. While many restrictions will gradually be lifted, the effects of the current crisis are likely to continue to need to be addressed by businesses.
Our lawyers are here to help you navigate this unprecedented experience as an employer. To discuss your unique situation and explore your options, please contact a member of our Labour & Employment team.