1. Medical Notes
Many Employers are asking if they can request a medical note authorizing an employee to return to work following quarantine related to COVID 19. Requesting clearance to safely return to work has been a common practice by Employers.
However, requesting notes is not suggested for this specific circumstance. At this time doctor’s offices are often closed or are limiting their attendance and employees will likely be unable to get a note. Instead, Employers can ask returning employees to fill out a questionnaire regarding symptoms, exposure etc. to determine if an employee can safely return to work. The form could indicate that any falsification would be grounds for discipline.
2. Temporary Layoff
Many businesses are seeing a decrease in business demand or a directive to cease operations. In response to this, some are considering a variety of options, a few of which are covered below. There are many things to take into account in relation to these circumstances: temporary layoff provisions (based on province), employment agreements, nature of your business etc. If you are considering a temporary layoff we suggest you consider advice from a Certified Human Resource Professional or an Employment Lawyer. Temporary layoff can lead to a claim of Constructive Dismissal so having advance information relating to this option is essential.
3. Records of Employment
If an employee is without earnings for a period of seven consecutive calendar days and Employer must issue a Record of Employment (ROE).
ROE Reason Codes:
- For an employee who is ill or under quarantine due to COVID-19, an ROE should be issued with the reason code “D” for illness or injury (there is no specific ROE code for quarantine).
- If an employee is sent home because the company is temporarily closing, or if the employee is being laid off because there is no work for them to do, the reason code on the ROE would be “A” – Shortage of work (layoff). This code also applies if you are only going to be laying off some employees, or parts of your business due to COVID-19.
- If an employee is electing not to report to work due to risk of exposure to COVID-19 or if an employee is taking a period of unpaid leave to take care of a family member, Employers are recommended to use Code “N” (Leave of absence).
When issuing the ROE do not put anything in Box 18 “Comments”. Service Canada has automated the way they process an ROE. If comments have been added, the ROE is removed from the automated processing system and a Service Canada agent has to review it manually. This review slows down the process and sometimes requires the agent to call you for clarification. For this reason, you should now only enter comments in Block 18 in exceptional circumstances.
Support For Employees
4. Canada Emergency Response Benefit (CERB)
The Government has implemented the CERB program whereby they will provide a taxable benefit of $2,000 every 4 weeks for up to 16 weeks to eligible workers who have lost their income due to COVID-19.
The CERB is available to workers who meet all of the following conditions:
- Those who reside in Canada, who are at least 15 years old;
- Those who have stopped working because of COVID-19 or are eligible for EI regular or sickness benefits;
- Those who have not voluntarily quit their job; and
Those who had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application.The CERB is accessible through a secure web portal as of April 6, 2020. Applicants are also able to apply via an automated telephone line or via a toll-free number.
If an employee applied for Employment Insurance Benefits prior to April 6, 2020 they do not need to re-apply but will be automatically assessed for the CERB.
On April 15, 2020 changes were announced to the eligibility rules which:
- Allows people to earn up to $1,000 per month while collecting the CERB.
- Extends the CERB to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work because of COVID-19.
- Extends the CERB to workers who have recently exhausted their EI regular benefits and are unable to find a job because of COVID-19.
Support for Employers
5. Canada Emergency Wage Subsidy
The Government is indicating that the purpose of this Subsidy is to help Employers keep and return workers to their payroll through the challenges posed by the COVID-19 pandemic. The Prime Minister, Justin Trudeau, announced the new Canada Emergency Wage Subsidy on March 27, 2020. This would provide a 75-per-cent wage subsidy to eligible Employers for up to 12 weeks, retroactive to March 15, 2020.
This wage subsidy aims to prevent further job losses, encourage Employers to re-hire workers previously laid off as a result of COVID-19, and help better position Canadian Employers to more easily resume normal operations following the crisis. While the Government has designed the wage subsidy to provide generous and timely financial support to Employers, it has done so with the expectation that Employers will do their part by using the subsidy in a manner that supports the health and well-being of their employees.
Eligible Employers would include individuals, taxable corporations, partnerships consisting of eligible Employers, non-profit organizations and registered charities.
Public bodies would not be eligible for this subsidy. Public bodies would generally include municipalities and local governments, Crown corporations, wholly owned municipal corporations, public universities, colleges, schools and hospitals.
This subsidy is available to eligible Employers that see a drop of at least 15 per cent of their revenue in March 2020 and 30 per cent for the following months (see Eligible Periods). In applying for the subsidy, Employers would be required to attest to the decline in revenue.
An Employer’s revenue for this purpose would be its revenue in Canada earned from arm’s-length sources. Revenue would be calculated using the Employer’s normal accounting method, and would exclude revenues from extraordinary items and amounts on account of capital.
The Government Clarified that Employers would be allowed to calculate their revenues under the accrual method or the cash method, but not a combination of both. Employers would select an accounting method when first applying for the CEWS and would be required to use that method for the entire duration of the program.
For registered charities and non-profit organizations, the calculation will include most forms of revenue, excluding revenues from non-arm’s length persons. These organizations would be allowed to choose whether or not to include revenue from government sources as part of the calculation. Once chosen, the same approach would have to apply throughout the program period.
How to Apply:
Eligible Employers are able to apply for the Canada Emergency Wage Subsidy through the Canada Revenue Agency’s My Business Account portal as well as a web-based application. Employers would have to keep records demonstrating their reduction in arm’s-length revenues and remuneration paid to employees.
Amount of Subsidy:
The subsidy amount for a given employee on eligible remuneration paid for the period between March 15 and June 6, 2020 would be the greater of:
- 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
- The amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.
In effect, Employers may be eligible for a subsidy of up to 100 per cent of the first 75 per cent of pre-crisis wages or salaries of existing employees. These Employers would be expected where possible to maintain existing employees’ pre-crisis employment earnings.
The pre-crisis remuneration for a given employee would be based on the average weekly remuneration paid between January 1 and March 15 inclusively, excluding any seven-day periods in respect of which the employee did not receive remuneration.
Employers will also be eligible for a subsidy of up to 75 per cent of salaries and wages paid to new employees.
Eligible remuneration may include salary, wages, and other remuneration like taxable benefits. These are amounts for which Employers would generally be required to withhold or deduct amounts to remit to the Receiver General on account of the employee’s income tax obligation. However, it does not include severance pay, or items such as stock option benefits or the personal use of a corporate vehicle.
A special rule will apply to employees that do not deal at arm’s length with the Employer. The subsidy amount for such employees will be limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of the lesser of $847 per week and 75 per cent of the employee’s pre-crisis weekly remuneration. The subsidy would only be available in respect of non-arm’s length employees employed prior to March 15, 2020.
There would be no overall limit on the subsidy amount that an eligible Employer may claim.
Employers are expected to make their best effort to top-up employees’ salaries to bring them to pre-crisis levels.
6. Temporary Wage Subsidy
The 10% Temporary Wage Subsidy for Employers is a three-month measure that will allow eligible Employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA).
Note: The Canada Emergency Wage Subsidy, which provides a 75% wage subsidy to eligible Employers for up to 12 weeks, is a separate program.
- Those that are a(n):
- individual (excluding trusts),
- partnership (see nte below),
- nn-profit organization,
- registered charity, r
- Canadian-controlled private corporation (including a cooperative corporation) eligible for the small business deduction;
- Have an existing business number and payroll program account with the CRA on March 18, 2020; and
- Pay salary, wages, bonuses, or other remuneration to an eligible employee.
How Much is the Subsidy?
The subsidy is equal to 10% of the remuneration you pay from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee to a maximum of $25,000 total per Employer.
7. Access to Credit
The Canadian Government has established a Business Credit Availability Program (BCAP) to provide $65 billion of additional support through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).
BDC and EDC are working with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation, exportation and tourism.
This program includes:
a) Canada Emergency Business Account
To ensure that small businesses have access to the capital they need to see them through the current challenges, the Government of Canada is announcing the launch of the new Canada Emergency Business Account, which will be implemented by eligible financial institutions in cooperation with Export Development Canada (EDC).
This $25 billion program will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced, due to the economic impacts of the COVID-19 virus.
This will better position them to quickly return to providing services to their communities and creating employment. Small businesses and not-for-profits should contact their financial institution to apply for these loans.
To qualify, these organizations will need to demonstrate they paid between $20,000 to $1.5 million in total payroll in 2019. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000).
b) Loan Guarantee for Small and Medium-Sized Enterprises
Small and medium-sized enterprises (SMEs) may be particularly vulnerable to the impacts of COVID-19. To support their operations, EDC will guarantee new operating credit and cash flow term loans that financial institutions extend to SMEs, up to $6.25 million. The program cap for this new loan program will be a total of $20 billion for export sector and domestic companies.
c) Co-Lending Program for Small and Medium-Sized Enterprises
To provide additional liquidity support for Canadian businesses, the Co-Lending Program will bring the Business Development Bank of Canada (BDC) together with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.
Eligible businesses may obtain incremental credit amounts up to $6.25 million BDC’s portion of this program is up to $5 million maximum per loan. Eligible financial institutions will conduct the underwriting and manage the interface with their customers. The potential for lending for this program will be $20 billion.
These programs will roll out in the three weeks after March 27 and interested businesses should work with their current financial institutions.
8. Canada Emergency Commercial Rent Assistance (CECRA)
This program will lower rent by 75 per cent for small businesses that have been affected by COVID-19.
The program will provide forgivable loans to qualifying commercial property owners to cover 50% of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June.
The loans will be forgiven if the mortgaged property owner agrees to reduce the small business tenants’ rent by at least 75% under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25% of the rent.
Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70% drop in pre-COVID revenues. This support will also be available to non-profit and charitable organizations.
It is expected that CECRA will be operational by mid-May, and further details will be announced soon.
9. WSIB Financial Relief
The financial relief package allows businesses to defer premium reporting and payments until August 31, 2020. Businesses who report and pay monthly, quarterly or annually based on their insurable earnings are eligible for this deferral.
Each customer reports and pays on the previous full month or quarter, for example March 31 reporting and payment obligation covers the period of February 1-29. The following payments are eligible for deferral:
- Monthly: March 31, April 30, May 31, June 30, July 31, Aug 31
- Quarterly: April 30, July 31
- Annual: April 30
The relief package also applies to Schedule 2 organizations – publicly funded organizations (municipalities, hospitals, school boards), and other businesses who are involved in federally regulated industries. All payment obligations (weekly and monthly) for Schedule 2 businesses will be deferred until August, 31, 2020. No interest will accrue on outstanding premium payments for Schedule 1 businesses and no penalties will be charged during this six-month deferral period. Schedule 2 account balances will not accrue debit interest as part of the financial relief package.
How do I apply for the relief package?
All businesses covered by the WSIB’s workplace insurance are automatically eligible for the financial package. No action is required from businesses to receive the financial relief.
Does my business have to participate in the financial relief package?
You do not have to participate in the financial relief package. You can continue to report and pay on a monthly, quarterly or annual basis. You can also report now and defer payment until later.
10. Deferral of Sales Tax Remittance and Customs Duty Payments
The Government will allow businesses, including self-employed individuals, to defer until June 30, 2020 payments of the Goods and Services Tax / Harmonized Sales Tax (GST/HST), as well as customs duties owing on their imports.
The deferral will apply to GST/HST remittances for the February, March and April 2020 reporting periods for monthly filers; the January 1, 2020 through March 31, 2020 reporting period for quarterly filers; and for annual filers, the amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year.
For GST and customs duty payments for imported goods, deferral will include amounts owing for March, April and May.
We hope this information is useful to your business. If you have additional questions or you have unique circumstances, please contact your Personal Coach who will be able to refer you to the appropriate resource.