McLennan Ross Update for Thursday

By McLennan Ross Labour & Employment Team

What we are seeing

• Prime Minister Trudeau announced yesterday that the Canadian Government was updating the 75% Canada Emergency Wage Subsidy (CEWS) program to relax the parameters to qualify. Changes include:
• Allowing employers to measure revenue based on either “as it is earned” or “as it is received”;
• A reduction in the drop of revenue required to be shown in March 2020 from 30% to 15%; and,
• Expanding the ability of employers to use revenues from January and February as the baseline as opposed to the equivalent month from 2019. 
• Charities are also being permitted to elect whether to include government revenues in their calculations of lost revenue. The Government also announced that business owners found to have misused the CEWS could face up to five years in prison and heavy fines potential as much as 225% of the subsidy received.
• In an attempt to address the gaps in the Canada Emergency Relief Benefit (CERB), Prime Minister Trudeau also suggested that eligibility may change to allow employees working less than 10 hours per week to qualify. As opposed to allowing students to apply for the CERB to replace lost summer positions, Trudeau announced instead a temporary change to the Canada Summer Jobs program, permitting employers who hire summer students to apply for a subsidy of up to 100% of the applicable hourly minimum wage. An immediate quandary is how this modification will assist if employers are not open for business or still do not need additional staff due to reduced operations as a result of the ongoing state of emergency. The Government of Canada remains hesitant to allow students or other workers who had and lost summer employment to apply for and receive the CERB.

What we are hearing

• The Chief Justice and Associate Chief Justice of Alberta are initiating discussions with representatives of the legal bar to determine how the legal system is adapting to the severely reduced court access and how best to manage litigation moving forward. On April 8, 2020, the Alberta Branch of the Canadian Bar Association hosted a webinar for 500 members of the Alberta bar to provide an update on the state of the courts and the impact of recent changes on the practice. 

What we are saying

• The ever evolving CERB and CEWS continue to make it challenging for employers attempting to determine the best way to manage the hopefully short-term drop in demand for goods and services from customers: 
• If the desire is to continue the employment relationship, the best option may now be the CEWS if the employer can afford to pay the remaining 25% of the employees’ salaries (as the program requires eligible employers to make best effort to do), as exemplified by WestJet’s decision to rehire 6,400 worker if and when it is approved for the CEWS, even though WestJet was candid that there may not be enough work for the rehired employees.
• If there is also a desire to continue the employment relationship but the employer has no need for the employees or cannot pay the remaining 25% of their salaries, a temporary layoff for 120 days (or more if extended) combined with the employee applying for the CERB would seem to be the next best choice.
• If the employer is prepared to move on from the employment relationship, it would at first blush appear that the best option would be to terminate the employee, pay him or her pay in lieu of termination notice, and allow the employee to apply for the CERB. From our review, however, any pay in lieu of notice received by the employee may delay eligibility for the CERB until the notice period for which the employee received compensation expires. If the employer and employee agree to a temporary layoff followed by a termination, or agree to the deferral of any notice payment until after the CERB entitlement expires, it is possible that the CERB could be clawed back by Service Canada if it investigates and finds an attempt to get around the eligibility requirements for the CERB.