Proposed Extension of Current CEWS Calculation for Inactive Employees Through Claim Period 7
Date: August 28, 2020
The federal government has announced that it proposes to extend the current treatment of employees on leave with pay under the Canada Emergency Wage Subsidy (CEWS) program by four weeks, from August 30, 2020 to September 26, 2020 (CEWS claim period 7).
Extension of Current CEWS Formula
As explained in our previous firm communication, as part of the extension of the CEWS, the government had previously passed legislation that would change the CEWS calculation for employees “on leave with pay” (i.e., furloughed or inactive employees) starting with the CEWS claim period 7. Originally, the government indicated its intention to align the CEWS available for inactive employees with the benefits available under the Canada Emergency Response Benefit or the Emergency Response Benefit under the Employment Insurance program.
The newly proposed change would mean that for CEWS claim period 7, the CEWS calculation for an inactive employee would remain the same as for claim periods 5 and 6. Employers who qualify for the CEWS would therefore be able to continue claiming up to a maximum benefit of $847 per week to support remuneration paid to an inactive employee in respect of CEWS claim period 7. The government has not yet introduced legislation or regulations to implement this change.
In its announcement, the government also stated that further details about the CEWS calculation for inactive employees for the remaining claim periods (i.e., period 8 and beyond) will be announced in the coming weeks.
Application Dates Released
The Canada Revenue Agency’s CEWS web page has also been updated to list the dates that applications are expected to open for future claim periods. Applications for CEWS claim period 6 (August 2, 2020 – August 29, 2020) can be made beginning on September 2, 2020. The balance of the application dates for each CEWS claim period are set out on the CEWS web page.
We continue to monitor all developments with respect to the programs available to assist employers during the COVID-19 pandemic and will provide further updates as they arise. Should you require further information regarding the impact of these changes on your organization, please contact any member of our Pension, Benefits and Executive Compensation Group.
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