COVID-19: OVERVIEW OF REVISED CEWS AND B.C. EMPLOYMENT LAW UPDATE
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COVID-19: OVERVIEW OF REVISED CEWS AND
B.C. EMPLOYMENT LAW UPDATE
Revised Canada Emergency Wage Subsidy (“CEWS 2.0”)
Canada Emergency Wage Subsidy (CEWS)
• Most fiscally significant relief measure enacted in response to COVID-
19
• Encourages employers to retain, re-hire, and employ new employees
• Subsidy takes form of a “refundable tax credit”
• Employer deemed to overpay its income tax liability, generating a refund
• Credit is taxable, but offsets deductions for employee remuneration (no net
taxable income inclusion)
• “Government assistance” for SR&ED claims
July 27, 2020 Legislative Amendments
• Wholesale reform to existing CEWS framework
• All employers with qualifying revenue decline
are now eligible
• Three broad categories of amendments:
• Technical fixes
• New framework
• Administrative and consequential changes
• Reception:
• CRA: “It’s quick and easy!”
• Taxpayers: “…???”
Technical Fixes
Payroll Service Providers
• CEWS 1.0:
• Applicant needed to have CRA payroll account as of March 15, 2020
• Problematic where payroll services provided by related company or third party
• CEWS 2.0 - Applicant can qualify if:
• on March 15, 2020:
• it employed at least one employee;
• payroll for its employee(s) was administered by another person or partnership; and
• the “payroll service provider” had a registered payroll remittance account at that time; and
• the payroll service provider used its payroll remittance account to make remittances in respect of the
employer’s employees.
Technical Fixes
Amalgamated Corporations
• CEWS 1.0:
• Deemed new corporation formed on amalgamation may have no prior year revenue
• Otherwise eligible employers ineligible for CEWS since no year-over-year revenue decline
• CEWS 2.0:
• Amalgamated entity deemed to be the same as its predecessors for the purposes of the
CEWS
• Anti-avoidance rule applies if amalgamation undertaken to benefit from CEWSTechnical Fixes
Baseline Remuneration
• Employee’s “pre-pandemic” wages relevant to CEWS subsidy amount
• Arm’s length employees – may increase CEWS subsidy (e.g., if wages have decreased)
• Non-arm’s length employees – may decrease CEWS subsidy (e.g., if wages have increased)
• CEWS 1.0:
• Baseline remuneration based on average weekly remuneration paid between January 1, 2020 and
March 15, 2020
• CEWS 2.0:
• Employers can elect for different baseline remuneration period
• Election available on employee-by-employee basis
• Useful for seasonal employees or employees on parental or disability leave in early 2020Technical Fixes
Baseline Remuneration (continued)
• Employers should carefully review each individual employee’s circumstances
when filing CEWS claim
Qualifying Period Regular Baseline Remuneration Period Elected Baseline Remuneration Period
March 15 – April 11, 2020
April 12 – May 9, 2020 January 1, 2020 - March 15, 2020 March 1, 2019 - May 31, 2019
May 10 – June 6, 2020
March 1, 2019 - May 31, 2019
June 7, 2020 - July 4, 2020 January 1, 2020 - March 15, 2020 OR
March 1, 2019 - June 30, 2019
July 5, 2020 - August 1, 2020
August 2, 2020 - August 29, 2020
August 30, 2020 - September 26, 2020 January 1, 2020 - March 15, 2020 July 1, 2019 – December 31, 2019
September 27, 2020 - October 24, 2020
October 25, 2020 - November 21, 2020Technical Fixes
Asset Purchase Elections
• Suppose employer completes business asset acquisition mid-year
• CEWS 1.0:
• New employer has no prior-year revenue from acquired business
• Old employer has no current-year revenue from sold business
• CEWS 2.0 - Election for new employer to adopt prior-year business revenues IF:
• Acquired assets constitute all or substantially all (i.e., 90%+) of the FMV of property used by the
seller in the course of carrying on business
• Buyer and seller jointly elect (or buyer alone if seller no longer exists)
• Revenue from business “assigned” from seller to buyer in calculating revenue decline
• Critical to consider election in asset purchase agreementsNew Framework
New Qualifying Periods
Current
Prior Reference New / Old Specified Maximum
Qualifying Period Reference
Period Formula Percentage Base %
Period
85%
#1 March 15 – April 11, 2020 March 2020 March 2019 Old N/A
(15% decline)
70%
#2 April 12 – May 9, 2020 April 2020 April 2019 Old N/A
(30% decline)
CEWS 1.0 70%
#3 May 10 – June 6, 2020 May 2020 May 2019 Old N/A
(30% decline)
70%
#4 June 7 – July 4, 2020 June 2020 June 2019 Old N/A
(30% decline)
“Safe Harbour #5 July 5 – August 1, 2020 July 2020 July 2019 Both (30% decline) 60%
#6 August 2 – August 29, 2020 August 2020 August 2019 Both (30% decline) 60%
Periods” August 30 – September 26,
#7 September 2020 September 2019 New N/A 50%
2020
September 27 – October 24,
#8 October 2020 October 2019 New N/A 40%
2020
October 25 – November 21,
CEWS 2.0 #9
2020
November 2020 November 2019 New N/A 20% (40%?)
Prescribed Period ending no
#10 later than December 31, TBD TBD TBD TBD TBD
2020
Extended to
Summer 2021New Framework
New Formula – Application to Qualifying Periods
• Periods 1-4 (March 15 – July 4) = Old Formula
• Periods 5-6 (July 5 – August 29) = Greater of:
• Old Formula; and
• New Formula
• Periods 7-9 (August 30 – November 21) = New FormulaNew Framework
New Formula – Overview
• Fundamental distinction is whereas an employer’s revenue decline
previously affected that employer’s eligibility for the CEWS, that revenue
decline now affects the amount of that employer’s wage subsidy claim
• Two distinct components
• Base percentage subsidy intended for most employers with a revenue decline
no matter how small
• Top up subsidy intended for employers with the most significant revenue
declines
• Elements of the formula decline overtime reflecting an intention to
“wean” employers off CEWSNew Framework
Calculation for Active Arm’s Length Employees
• High-Level Calculation (Per Employee) = (Base percentage + top-up percentage) * eligible
remuneration (subject to cap)
MAXIMUM WEEKLY SUBSIDY PER EMPLOYEE
Base Percentage
20% 40% 50% 60%
0% $225.80 $451.60 $564.50 $677.40
5% $282.25 $508.05 $620.95 $733.85
Percentage
Top-up
10% $338.70 $564.50 $677.40 $790.30
15% $395.15 $620.95 $733.85 $846.75
20% $451.60 $677.40 $790.30 $903.20
25% $508.05 $733.85 $846.75 $959.65
• Employers who are not eligible for the top-up subsidy maximum weekly wage subsidy on a
per-employee basis would range from $225 to $677
• In most cases, only employers who have suffered a 65%+ revenue decline (using a three-
month average analysis) will be better off using the “New Formula” in the Safe Harbour
PeriodsNew Framework
Calculation for Other Employees
• Furloughed Employees – subsidy does not vary based on revenue decline
• Non-Arm’s Length Employees – based on employee’s baseline remuneration, rather than current
remuneration
• Pay-Reduced Employees – No special rules in New Formula
Type of Employee Qualifying Period Formula
Active Safe Harbour Qualifying Periods Old Formula or New Formula
Active New Qualifying Periods New Formula
Old Formula, with no 30% revenue
Furloughed Safe Harbour Qualifying Periods
decline needed
Lesser of (i) eligible remuneration and (ii)
Furloughed New Qualifying Periods
prescribed amount.
Old Formula or New Formula
Non-Arm’s Length Safe Harbour Qualifying Periods
Limited by Baseline Remuneration
New Formula
Non-Arm’s Length New Qualifying Periods
Limited by Baseline Remuneration
d Reduced Pay Safe Harbour Qualifying Periods Old Formula or New Formula
Reduced Pay New Qualifying Periods New FormulaAdministrative and Consequential Changes
• Binding effect of elections segregated to groups of qualifying periods
• Claim deadline extended to February 1, 2021
• Broadening eligible employees to include employees without
remuneration for consecutive 14-day period
• Cash employers (farmers and fisherman) can elect to use accrual
method
• Continuity rule for revenue declinesCEWS Administration Update
• Audit activity commencing
• “Standard” audit letter can be 7-page request list, with 10-15 day turnaround
time
• Higher burden than expected
• Significant potential for administrative errors in initial qualifying periodsKey Takeaways to Maximize CEWS Claim
• Employers who were not eligible under old regime could be eligible
under new regime
• Employers need to run multiple scenarios with each employee and
each revenue computational rule to maximize claim
• Employers may be able to refile prior period applications and obtain
higher subsidy in certain circumstances (most changes are retroactive)
• Wrong qualifying revenues calculations can leave money on the table
(or lead to more severe consequences)Alexander Demner Ian Humphries
Phone: 604-602-4224 Phone: 604-602-4215
acdemner@thor.ca ihumphries@thor.ca
Legal Disclaimer: We understand the Content presented in this webinar to be accurate as of the date of this presentation of
October 16, 2020. However, the Content may be inaccurate or incomplete, and particular facts unique to your situation may render
the Content on this webinar inapplicable or incorrect for your situation. To determine if this Content is applicable to your situation,
you should always consult with a lawyer for independent legal advice.The Changing (or Changed) Workplace: Challenges created by COVID-19 and how employers can respond James D. Kondopulos and Mike Hamata Roper Greyell LLP – Employment and Labour Lawyers Friday, October 16, 2020
Layoffs, recalls and terminations and
mitigation of the associated risk
• When a layoff is not a layoff
• ESA is permissive only: s. 63(5)
• Express term or practice
21 Your workplace. Our business.Layoffs, recalls and terminations and
mitigation of the associated risk
• Current ESA maximums:
– Temporary layoff (non-COVID-19): 13 weeks in a 20-
week period
– Regulation s. 45.01 is no longer available
– Variance applications
22 Your workplace. Our business.Layoffs, recalls and terminations and
mitigation of the associated risk
• Unilateral layoffs are a legitimate option
• Mitigation risk for employee
• Ready to recall to address risk – subject to poisoned
well
23 Your workplace. Our business.Occupational health and safety issues –
COVID-19-related anxiety
• Significant increase in requests for accommodation
connected to anxiety around return to work
• General feeling of worry or fear of contracting
COVID-19 – not sufficient to engage the duty to
accommodate
• Employee must first establish the existence of
disability and provide detailed medical information
about restrictions and limitations
24 Your workplace. Our business.Occupational health and safety issues –
COVID-19-related anxiety
• If the employee has established a need for accommodation and:
(1) no accommodation is possible in the workplace; or (2)
restrictions are such that employee must be at home, there may
be a need to consider work-from-home arrangements
• If an employee worked from home during the shutdown, it may be
feasible to continue those arrangements as a potential form of
accommodation
• Remember the employee is entitled to reasonable and not perfect
or preferred accommodation
25 Your workplace. Our business.Employee tests positive – then what?
• No obligation to report case of COVID-19 to
WorkSafeBC but employer response may be subject
to WorkSafeBC investigation
• Follow your policy, including COVID-19 safety plan
• Cooperate with public health authorities
26 Your workplace. Our business.Work refusal process
• Employee may refuse on reasonable grounds to
return to work due to general fear of contracting
COVID-19 in the workplace
• Should treat as work refusal under workers
compensation and occupational health and safety
legislation
27 Your workplace. Our business.Work refusal process
• Key: Ensure the employee is safe
• Investigate work refusal through joint health and
safety committee (as applicable)
• If a risk exists, address the risk
• If no risk exists, ask the employee to report to the
job
• If employee continues in work refusal, contact
WorkSafeBC to investigate
28 Your workplace. Our business.Work refusal process
• Compliance with WorkSafeBC requirements and
guidelines, public health recommendations and
your own policies (including COVID-19 safety plan)
will be important to establish a safe workplace
• If the employer can demonstrate compliance, it will
be more difficult for the employee to argue
workplace risk
29 Your workplace. Our business.Privacy and human rights considerations
• Testing for COVID-19
• Requirements for face masks and temperature
checks
• Contact tracing
• Collection, use, disclosure and retention of
employee personal information
30 Your workplace. Our business.Duty to accommodate
• Job-protected leave provisions do not entitle employee
to a remote work arrangement or other paid modification
to the job
– Leave protected under statute is unpaid
• Request for work-from-home arrangement or other job
modification for COVID-19 reasons (illness, childcare,
etc.) should also be considered as a request for
accommodation under human rights legislation
31 Your workplace. Our business.Family status accommodation
• Even if school or daycare is open, there may be
employees who prefer to work remotely (in whole or in
part) and keep their children at home
• If care option is available, the employee is likely not
entitled to the work-from-home arrangement (even if he
or she prefers it)
– Special circumstances – e.g. child with a medical condition
– Can request medical information to substantiate the alleged
need
32 Your workplace. Our business.Family status accommodation
• Employer always entitled to information to evaluate
the alleged need for accommodation
– Other options or supports available? Family members,
paid care, etc.
– Is this a “need” or “want”?
• Employee does not have to exhaust all options
before asking the employer for accommodation
33 Your workplace. Our business.JAMES D. KONDOPULOS 604.806.3865
jkondopulos@ropergreyell.com
MIKE HAMATA 604.806.3856
mhamata@ropergreyell.com
Roper Greyell LLP
Employment + Labour Lawyers
1850-745 Thurlow Street, Vancouver, BC V6E 0C5
T 604.806.0922 F 604.806.0933 ropergreyell.com
The purpose of this presentation is to provide an overview of this area of the law. This does not by any means constitute a full analysis of the law or an opinion of Roper
Greyell LLP or any member of the firm on the points of law discussed. © Roper Greyell LLP 2020Questions? Alexander Demner Phone: 604-602-4224 acdemner@thor.ca
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