Proposed Extension of Current Canada Emergency Wage Subsidy (CEWS) Calculation for Inactive Employees Through Claim Period 8
Date: September 28, 2020
The federal government has announced that it intends to extend the current treatment of employees on leave with pay under the Canada Emergency Wage Subsidy (CEWS) program by a further four weeks, from September 27, 2020 to October 24, 2020 (CEWS claim period 8).
This follows the government’s previous announcement of the extension of the current treatment of employees on leave with pay under the CEWS through CEWS claim period 7 (August 30, 2020 to September 26, 2020), as explained in our prior firm communication.
The newly proposed change would mean that for CEWS claim period 8, the CEWS calculation for an inactive employee would remain the same as for claim periods 5 (July 5, 2020 – August 1, 2020), 6 (August 2, 2020 – August 29, 2020) and 7. Employers who qualify for the CEWS will therefore be able to continue claiming up to a maximum weekly subsidy of the greater of:
- for arm’s length employees, 75% of the amount of remuneration paid, up to a maximum benefit of $847 per week, and
- 75% of the employee’s pre-crisis weekly remuneration (i.e., baseline remuneration) up to a maximum benefit of $847 per week or the amount of remuneration paid, whichever is less.
While the government filed the necessary regulation to support the extension through CEWS claim period 7, it has not yet introduced regulations to implement the further extension through CEWS claim period 8.
When the government first introduced different CEWS calculations for employees on leave with pay, the government indicated that in later CEWS claim periods the subsidy would be aligned with the benefit available under the Canada Emergency Response Benefit and the Emergency Response Benefit under the Employment Insurance program. In its new announcement, the government has moved away from that message and stated that, for the periods following CEWS claim period 8, it will review the CEWS program in light of ongoing progress in fighting COVID-19 as well as any adjustments needed to facilitate the extension of the CEWS into 2021, as was announced during the Speech from the Throne on September 23, 2020.
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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