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At more than 700 pages the Federal government budget released yesterday includes something for everyone (we will briefly update the most significant announcements for employers). Permanent, unfunded spending increases means the deficit will enlarge to $354 billion, pushing the federal debt past $1 trillion.
Employment Insurance (EI)
Currently, there is no waiting period for any EI benefits. A minimum of $500 in weekly benefits is available for those displaced from work (or 55% of earning to a weekly maximum of $595) provided workers have accumulated 120 hours of insurance earnings. Those accommodations will continue until at least September 2021, and the government has committed in the budget to ensure only 420 hours of work are required for benefit eligibility for at least the next three years. Further liberalization of the EI program is expected. Benefits for sickness will be increased by more than 70% to a total of 26 weeks by the summer of 2022.
Canada Recovery Benefit (CRB)
The Canada Recovery Benefit provides benefits to those impacted by Covid-19 who are self-employed and to those workers not covered by EI. It has been extended a further 12 weeks for a total of 50 weeks. A $500 weekly payment remains payable, however, that amount will decline to $300 a week for the final eight weeks of this latest extension.
Canada Emergency Wage Subsidy (CEWS)
CEWS, scheduled to end in June, will be further extended until September 25, 2021 but will tapered significantly. Companies eligible for CEWS currently qualify for up to 70 per cent of an employee’s salary (to a maximum of $847 per week). Beginning in mid-July, CEWS payments will be gradually reduced, and by the program’s end in September, companies will be able to collect a maximum of 20 per cent of an eligible employee’s salary, to a weekly maximum of $226. In July, you will need at least a 10% revenue decline to be eligible for CEWS. Calculations depend on the decline in company revenue vs pre-pandemic conditions (2019), but here are some examples at different levels of revenue for the current month (you can alternatively use the ‘accrual’ accounting method if more favourable to your calculations):
- If Revenue decreases in April 2021 vs April 2019 by 75% à Wage subsidy would be 75% of wages you pay
- If Revenue decreases in April 2021 vs April 2019 by 50% à Wage subsidy would be 40% of wages you pay
- If Revenue decreases in April 2021 vs April 2019 by 20% à Wage subsidy would be 16% of wages you pay
CERS and Lockdown Support, like CEWS, will continue until September 2021. The subsidy rates will gradually decline over the July to September qualifying periods as well. The government has reserved legislative authority to extend both programs until November 20, 2021 if needed.
Canada Recovery Hiring Benefit (CRHB)
The Canada Recovery Hiring Benefit (CRHB) is a new program. This program provides employers with a subsidy of up to 50 percent on the wages paid to newly hired employees between June 6, 2021 and November 20, 2021. It can also be used to fund salary increases or the restoration of working hours and wages to existing employees which are made after June 6th. Employers qualify for this program if they have a drop in revenue using the same criteria (and the same reporting periods) as for CEWS. The 50% subsidy will start to taper in September (to 40%), falling to a 20% subsidy by its November 2021 conclusion. Eligible employers cannot claim both the CEWS and the CRHB for an employee and must choose one program or the other (whichever results in a greater subsidy).
A centrepiece of the budget and the one most discussed in news reports, the federal government will introduce a national “$10 per day daycare” program similar to the one that exists already in Quebec (it is credited by some with improving women’s participation in the workforce by 4% more than the national average). $30-billion will be invested over the next five years, and $8.3-billion each year after that, to bring child-care fees down to a $10-a-day average by 2026. Public announcements failed to mention that 50% of the program requires funding by the provinces and will require their cooperation. Recent examples of federal-provincial cooperation don’t necessarily support a streamlined rollout of this program in the years ahead. Putting that aside, the program will have positive effects in supporting employee participation in the workforce, as well as their employers in an increasingly tight labour market.
Federal Minimum Wage Increase
For the very small number of workers (26,000) who work in the federally regulated private-sector, the minimum wage will increase to $15 an hour. This does not apply to most workplaces in Ontario (unless you operate in sectors such as banking, telecommunications, airports, or marine operations as examples).
We trust that this information is useful. If you require assistance in understanding the application of any of these programs to your workplace, please feel free to contact us