COVID-19: Practical Strategies to Mitigate Risk and Access the CEWS
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COVID-19: Practical Strategies to Mitigate Risk
and Access the CEWS
Kyle B. Lamothe Ian Humphries Shana French Erin R. Kuzz
Phone: 416-855-6539 Phone: 604-602-4215 Phone: 416-458-1289 Phone: 416-603-6242
kblamothe@thor.ca ihumphries@thor.ca sfrench@sherrardkuzz.com erkuzz@sherrardkuzz.com
Revised Canada Emergency Wage Subsidy (“CEWS 2.0”)
Canada Emergency Wage Subsidy (CEWS)
• Most significant economic relief measure enacted in response to
COVID-19
• Intended to encourage employers to re-hire workers previously laid off
as a result of COVID-19, avoid future job losses, and allow fast
resumption after crisis
• Amounts received are a “refundable tax credit”
• Employer deemed to have overpaid its income tax, is granted a refund
• Credit is taxable to the employer, but remuneration paid to employees should
offset for no new taxable income
• Is “government assistance” that counts against scientific research and
experimental development (SR&ED) claims
Overview of July 27, 2020 Legislative Changes
• Wholesale reform of the existing framework
affecting all employers who have suffered a
decline in qualifying revenues
• Three broad categories:
• Previously-announced measures (aka legislative
fixes);
• Substantive changes; and
• Administrative and consequential changes
• Result:
• CRA: “it’s quick and easy!”
• Taxpayers: “…???”
Previously-Announced Measures
Payroll Service Providers
• Pre-Existing Regime
• Applicant needed to have a registered payroll account with the CRA as of March 15, 2020
• Problematic in situations where payroll services provided by a third party
• CEWS 2.0 - Applicant can qualify if:
• on March 15, 2020:
• it had at least one employee;
• the payroll for its employees 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.
Previously-Announced Measures
Amalgamated Corporations
• Pre-Existing Regime
• No rule to adjust revenue decline calculations when the employer was formed as the result of
an amalgamation in either 2019 or 2020.
• Could cause otherwise eligible employers to not qualify since no ability to compare a year-
over-year revenue decline.
• CEWS 2.0.
• New provision deems amalgamated entity to be the same entity as its predecessor entities
for the purposes of the CEWS.
• Subject to anti-avoidance rules if amalgamation undertaken to take advantage of CEWS.
Previously-Announced Measures
Baseline Remuneration
• Pre-Existing Regime
• Employer could calculate their subsidy on the basis of average weekly remuneration paid to
employee between January 1st, 2020 and March 15th, 2020.
• Intention was to not penalize employers who had temporarily decreased their remuneration
paid to arm’s length employees as a result of pandemic.
• CEWS 2.0.
• New provision permits employer to elect for different baseline remuneration periods for
each employee.
• Intended to remedy unintended results in the case of seasonal employees or employees on
parental or disability leave.Previously-Announced Measures
Baseline Remuneration (continued)
• Suggests employers should carefully review each individual employee’s
circumstances as part of their application
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, 2020Substantive Changes
New Qualifying Periods
Current Prior Reference New / Old Specified Maximum Base
Qualifying Period
Reference Period Period Formula Percentage %
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 #3 May 10 – June 6, 2020 May 2020 May 2019 Old
70%
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%
Prescribed Period ending no
#10 later than December 31, TBD TBD TBD TBD TBD
2020
Extension to
Summer 2021?Substantive Changes
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 FormulaSubstantive Changes
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 CEWS.Substantive Changes
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
Percentage
5% $282.25 $508.05 $620.95 $733.85
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 Periods.Substantive Changes
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 decline
Furloughed Safe Harbour Qualifying Periods
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 FormulaSubstantive Changes
Asset Purchase Elections
• CEWS 1.0 = Problem in situations where employer had acquired a new business
after prior year period, since revenue decline was artificially reduced (or
eliminated).
• CEWS 2.0 = Election to include prior year-revenues of the business IF:
• acquired assets constituted all or substantially all (generally 90% or greater) of the fair
market value of the property used by the seller in the course of carrying on business;
and
• Both buyer and seller elect.
• Result = revenue from business “assigned” to buyer and excluded by seller for the
purposes of CEWS and calculating revenue decline
• Key Takeaway = consider election protocols in any asset purchase agreements
going forwardAdministrative and Consequential Changes
• Binding Effect of Elections restricted to first five qualifying periods
• Filing Deadline moved from October 1, 2020 to February 1, 2021
• Broadening of category of eligible employees to include employees
without remuneration for a 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 period
• Higher Burden than expected
• Significant potential for administrative errors in initial qualifying
periodsKey Takeaways for Employers Seeking to Maximize 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 calculations for qualifying revenues can lead to more severe
consequencesKyle B. Lamothe Ian Humphries
Phone: 416-855-6539 Phone: 604-602-4215
kblamothe@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 8, 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.COVID-19: Practical Strategies to
Mitigate Employment Risk
Erin R. Kuzz and Shana French
October 8, 2020
250 Yonge Street Suite 3300
Toronto, Ontario M5B 2L7
Tel 416.603.0700
Fax 416.603.6035
24 Hour 416.420.0738
www.sherrardkuzz.comAgenda
◼ Statutory leaves
❑Ontario Infectious Disease Emergency Leave
◼ Duty to Accommodate
❑Family Status and Child Care Preferences
❑COVID-19-Related Anxiety
◼ Safety Issues and Work Refusal
❑Reporting and Investigation
◼ Return to Work Considerations
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 21
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comNew Ontario ESA Emergency Leave
◼ Infectious Disease Emergency Leave (IDEL)
❑Job protected leave to an employee unable to work due to COVID-19
related issues
❑Retroactive to January 25, 2020
❑No time limit on how long an employee may take the leave, once eligible
❑Will remain in place until COVID-19 is no longer a designated infectious
disease under the ESA
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 22
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comNew Ontario ESA Emergency Leave
◼ Available in a variety of circumstances, including:
❑Employee is in isolation in accordance with public health information or
direction
❑Employee needs to provide support or care to a person for a reason related
to COVID-19, such as a family member required to isolate by public health
❑Employer directs the employee not to work due to a concern that
COVID-19 could be spread in the workplace
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 23
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comNew Ontario ESA Emergency Leave
◼ Entitled to IDEL to provide care and support to child at home due to
school or daycare closure
❑Leave is also available to an employee who chooses to keep a child out of
school or daycare (e.g., for virtual learning) due to fear of COVID-19
◼ IDEL can be taken sporadically (days or weeks off), does not need to be
taken all at once
❑ e.g., time off as required to care for a child who must be held out of school if they
have COVID-19 symptoms
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 24
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comNew Ontario ESA Emergency Leave
◼ If employee requests IDEL:
❑Cannot request medical certificate to verify entitlement
❑Can request documentation from Public Health to support need to self-
isolate (if that is the basis for the decision to remain at home)
◼ Employee will need to provide some explanation of “care and support”
they provide
❑Can request non-medical supporting documentation
❑e.g., written confirmation of daycare closure
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 25
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comOther Ontario Statutory Leaves
◼ Other ESA unpaid leaves that may be triggered:
❑Sick Leave
❑Family Responsibility Leave
❑Family Medical Leave
❑Family Caregiver Leave
❑Critical Illness Leave
◼ Ensure you comply with other leave entitlements under employer policy
or collective agreement
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 26
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comDuty to Accommodate
◼ Job-protected leave provisions do not entitle employee to a remote work
arrangement or other paid job modification
❑Unpaid, job-protected time off only
◼ Request for remote work or other job modification for COVID-19
related reasons (illness, childcare, etc.) should be treated as request for
accommodation under human rights legislation
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 27
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comFamily Status Accommodation
◼ Even if school or daycare is open, may have employees who want to
work remotely, in whole or part, and keep children home
◼ Not likely entitled to work from home arrangement due to preference to
stay home if care is available
❑ There may be extenuating circumstance, e.g., child with a medical condition
❑ Can request medical information to substantiate need for the leave
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 28
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comFamily Status Accommodation
◼ Employer entitled to information to evaluate need for accommodation
❑What “other supports” are available? Family members, paid care, etc.
❑Is this a “want” or a “need”?
◼ Employee does not need to exhaust all options before asking employer
for accommodation
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 29
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comCOVID-19-Related Anxiety
◼ Employers experiencing increasing number of requests for
accommodation related to anxiety around return to work
◼ General feeling of worry or fear of contracting COVID-19 is not
sufficient to engage duty to accommodate
◼ Employee needs to establish existence of a disability and provide
detailed medical information about restrictions and limitations
◼ Only then must the employer look to accommodation
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 30
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comAccommodation
◼ If employee has established a need for accommodation, and no
accommodation possible in the workplace (or restrictions are such that
employee must be at home), may need to consider work-from-home
arrangement
◼ That an employee worked from home during shutdown may support the
feasibility of the arrangement as a potential form of accommodation
◼ But, remember, the employee is entitled to reasonable, not preferred,
accommodation!
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 31
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comSafety Issues and Work Refusal ◼ Employer is required to report a case of COVID-19 in the workplace to the ministry of labour (in addition to the joint health and safety committee or trade union) if advised the worker has an occupational illness or that a claim in respect of an occupational illness has been filed with the WSIB by or on behalf of the worker ◼ Otherwise, no obligation just because a worker has COVID-19 Sherrard Kuzz LLP, Employment & Labour Lawyers COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 32 Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.com
Work Refusal Process
◼ An employee may refuse to return to work due to a general fear of
contracting COVID-19 in the workplace
◼ Should treat as work refusal under Occupational Health and Safety Act
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 33
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comWork Refusal Process ◼ Place employee in a safe area ◼ Investigate refusal with Joint H & S Committee worker representative ◼ If a risk exists, address risk ◼ If no risk exists, ask employee to return ◼ If employee continues to refuse, contact ministry of labour to investigate Sherrard Kuzz LLP, Employment & Labour Lawyers COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 34 Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.com
Work Refusal Process
◼ Some suggestion that ministry of labour inspectors have been taking the
position a worker must be physically at the workplace before a work
refusal is triggered under the Occupational Health and Safety Act
◼ Employers should still comply with the work refusal process, but may
find inspector will not investigate on the basis it does not constitute a
work refusal
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 35
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comWork Refusal Process
◼ Remember: Compliance with public health recommendations and
ministry of labour guidelines regarding COVID-19 workplace safety will
be the minimum threshold to establish a safe workplace
◼ If employer can establish compliance, far less likely employee can assert
the workplace poses a risk
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 36
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comReturn to Work Plan
◼ Develop a return to work (RTW) plan before employees are back at work
◼ Consider:
❑Employee screening (now required)
❑Practices to reduce transmission
❑Personal protective equipment (source and provide)
❑Protocols if an employee is ill, symptomatic, travels outside of Canada,
etc.
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 37
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.comReturn to Work Plan
◼ Educate and train employees on the RTW plan
◼ Consider and plan how you will address a refusal to wear personal
protective equipment
◼ Follow public health guidelines and recommendations
❑Changing weekly
❑Even once RTW plan established, monitor public health guidance to ensure
protocols remain current
Sherrard Kuzz LLP, Employment & Labour Lawyers
COVID-19: Practical Strategies to Mitigate Employment Risk - Current as of October 2020 38
Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.com250 Yonge Street, Suite 3300
Toronto, Ontario, Canada M5B 2L7
416.603.0700 Phone
416.420.0738 24 Hour
416.603.6035 Fax
www.sherrardkuzz.com
39◼ The information contained in this presentation/article is provided for general information purposes only and does not
constitute legal or other professional advice, nor does accessing this information create a lawyer-client relationship. This
presentation/article is current as of October 8, 2020 and applies only to Ontario, Canada, or such other laws of Canada as
expressly indicated. Information about the law is checked for legal accuracy as at the date the presentation/article is
prepared, but may become outdated as laws or policies change. For clarification or for legal or other professional
assistance please contact Sherrard Kuzz LLP (or other counsel).
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