As the COVID-19 situation in Canada and around the world continues to develop rapidly, we are providing our latest update to employers. Below is an update on important information announced since our last update on March 26, 2020. We will continue to provide information as it becomes available and we remain available to you to answer any specific questions you may have.
Alberta Government Announces New Restrictions on Non-Essential Businesses and Public Gatherings
On March 27 the Alberta Government announced further restrictions to help stop the spread of COVID-19.
Restrictions are now in place for various close contact businesses. This includes direction for closure of businesses such as hair salons and barbershops, tattoo studios, esthetic services and various non-essential retail businesses such as those selling clothes, hobbies, toys, gifts, and gaming stores. Non-emergency and non-critical health services such as dentistry, physiotherapy, massage, podiatry, chiropractic and optometry services are restricted to essential emergency services. Dine-in restaurants may now only offer take-out and delivery services. Online and curb-sided pickup will be allowed for the retail businesses. Business not restricted are required to follow risk mitigation strategies. A list of the businesses impacted and other aspects of the restrictions can be found here.
Further there are now more prohibitions on public gatherings, limiting them to 15 or less and requiring mandatory distancing of two (2) metres between people. This applies to public and private gatherings including funerals, weddings, and worship gatherings. It also applies in open spaces and parks. The limit does not apply to grocery stores, health care facilities, or shopping centres (though access is prohibited to the retail stores now impacted by the restrictions). More details can be found at the link above. Federal Government Announces Increase in Wage Subsidy Program
In our March 18, 2020 update we alerted you to the Federal Government's new temporary wage subsidy program for small businesses. That program provided a subsidy equal to 10% of remuneration paid for a period of 3 months, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Employers take advantage of the subsidy by reducing the remittance of income tax withheld on their employee's pay.
Today the Federal Government announced an increase in the wage subsidy program from 10% to 75%. retroactive to March 15, 2020. The details of the modified subsidy program have not yet been released and it is not yet certain which businesses will qualify, what limits per employee and employer will be, or if the program will operate in the same way as the 10% program announced earlier. Clearly the intent is to help Canadian employers keep people employed during this difficult time. As details are released we will provide further updates.
The Federal Government also announced the creation of a new "Canada Emergency Business Account". This program will provide up to $25 billion to eligible financial institutions so they can provide interest-free loans to small businesses. Small business will be eligible to receive loans of up to $40,000. The loans would be interest free for a year, and there is potential for forgiveness of up to 10% of each loan. Again, as more details become available we will provide further updates.
Federal Government Addresses Tax Issues Regarding CERB Payments
In our March 26, 2020 update we provided information about the new Canada Emergency Response Benefit ("CERB") program. This program provides $2000 per month to persons who have lost their income because of the COVID-19 Crisis, including workers who would not have qualified for Employment Insurance. While we continue to await further details on the CERB program, the Federal Government has announced that the payments will not be subject to tax withholdings at the time of payment. Rather, the taxes on those payments will only be recovered when the employees resume earning an income.
Work-Share Programs, EI Top Ups by Employers and CERB
In our March 26, 2020 update we indicated that it was not clear how the new CERB program would impact the use of the EI Work-Share Program, and EI Supplemental Unemployment Benefit ("SUB") plans. The EI Work-Share Program allows for reduced hours for employees who share available work while receiving EI benefits. A SUB plan allows employers to provide top-up payments to their workers who are receiving EI, without reducing the EI benefits. Both arrangements currently require prior approval by Service Canada before they are implemented.
There are still insufficient details available about the CERB Plan or other changes to the EI program for us to be certain exactly how or if the CERB program will affect the EI Work-Share program or SUB plans. However, we anticipate that the Government will continue these programs in some form in conjunction with the CERB program. As such we have posted, on the Neuman Thompson Website, a more in-depth article on those programs so that employers who are interested may become more familiar with them. That in depth article may be accessed here.
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The information in this update is intended as general information and should not relied on as legal advice.
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