Federal Government Announces Updates to The Canada Emergency Wage Subsidy (CEWS)

Federal Government Announces Updates to The Canada Emergency Wage Subsidy (CEWS)

The CEWS has gone through many evolutions since it was first announced on March 27, 2020. On November 30, 2020, the Deputy Prime Minister and Minister of Finance released the Fall Economic Statement 2020 which introduces further changes to this crucial support program.

Background of the CEWS

Originally, the CEWS was designed to provide qualifying employers with a payment of up to 75% of an employee’s qualifying wages (up to a maximum of $847 per week), to encourage and assist employers to retain their staff during the pandemic. To qualify, employers had to have experienced a decrease in revenue of at least 30%, either based on the employer’s monthly revenues in the year prior, or relative to the average of its January 2020 and February 2020 revenues.  

In July, the government announced that the CEWS would be extended until the end of 2020 and that it would be removing the 30% revenue decrease threshold for employers to qualify for the program. Going forward, the amount of the subsidy was to be based on a sliding scale dependent on the actual revenue loss experienced by the employer, with an additional top-up subsidy available for those employers hardest hit by the pandemic (i.e. employers who had experienced a revenue decline of 50% or more). 

The subsidy available for furloughed or temporarily laid off employees was also adjusted to align with the benefits provided to individuals under the Canada Emergency Response Benefit and Employment Insurance. 

The maximum amount of the base subsidy was set to gradually decrease over time to facilitate a gentle phasing out of the program by the end of the year. 

In September, faced with a second wave of COVID-19 cases, the government announced that the CEWS would be extended into summer 2021. In October, the maximum amount of the subsidy was “frozen” at 65% of an employee’s eligible wages, to remain in effect until December 19, 2020.

New Changes Announced

Recognizing the severity of the second wave and the impact that it is having on employers and employees, the government has announced that they will once again be increasing the maximum subsidy under the CEWS to 75% of an employee’s qualifying wages. This new rate will apply from the period of December 20, 2020 until March 13, 2021. 

The amount of revenue loss experienced by an employer will still be relevant in determining their entitlement under the CEWS. In this regard, the maximum base subsidy will remain at 40%, with the maximum top-up wage subsidy increasing to 35%. The weekly wage subsidy for furloughed employees will also continue to apply until March 13, 2021 to ensure equitable treatment between employees who are receiving EI benefits versus the CEWS.

Details for subsequent periods between March 14, 2020 and June 30, 2021 will be announced in the coming months.

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