With COVID-19’s financial impact on business, the federal government has recently put in special measures to the Work-Sharing Benefit Program.
If you are considering reducing your staff, instead of laying them off all together, check out the following blog and contact one of our lawyers to develop a plan tailored to your business.
What are Work-Sharing Benefits?
Work-Sharing (WS) is a program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activity beyond the employer’s control.
The program allows employers to temporarily reduce its employees work schedule, by providing the employee with a portion of their reduced income.
The program is an agreement between 3 parties: 1) Employer; 2) Employee; and 3) Service Canada. The employer and employee must agree to participate in the WS agreement. The application is then sent to Service Canada.
The Federal Government’s special measures recently implemented in light of COVID-19 include:
- Waiving the mandatory waiting period;
- Extending the extension period from 12 to 38 weeks; and,
- Adding special measures for forestry, steel and aluminum sector.
How do WS Benefits work?
The employer and employee agree to a reduction in hours of work. Service Canada will then pay 55% of the lost income. The following example is adapted from the Service Canada website:
- Samantha works full-time at an engineering firm earning $769 per week;
- Due to COVID-19, the firm has faced a significant reduction in workload;
- The firm decides to enter into WS agreement with Service Canada where all unit members reduce their work by 35%;
- If Samantha does not agree to the voluntarily reduced work hours, she will be laid off and receive $423 per week (55% of her weekly income);
- If she agrees to reduce her work hours by 35% then she will receive the following payments:
- $500 per week from her employer (65% of her previous weekly income); and
- $148 per week from Service Canada (55% of the lost income)
- She now has the potential to earn $648 per week and keep her skills up to date.
Who is Eligible?
Eligible employers must:
- Have been in business in Canada year-round for at least one year;
- Be a private business, a publicly held company, or a not-for-profit organization;
- Demonstrate that shortage of work is temporary and beyond their control; and,
- Demonstrate a recent decrease in business activity of approx. 10%;
Eligible employees must:
- Be “core employees” (i.e. year-round, permanent full-time or part-time employees, who carry out the everyday functions of normal business);
- Be eligible to receive EI benefits i.e. 600 insurable hours, and have paid EI premiums; and,
- Agree to a reduction of their normal working hours.
What is a Work-Sharing Unit?
A WS unit is a group of eligible employees who have agreed to participate in the WS program. The unit usually includes all employees in a single job description or all employees who perform similar work.
The unit should not include employees who are necessary for business’ recovery, such as senior management, outside sales representatives etc.
There must be a minimum of two employees in a WS unit.
The WS unit must agree to reduce their normal work hours and to share available work. If the hours of work increase during the WS period, the available hours must be equally shared among the members of the unit. Therefore, dividing employees into separate units based on their positions is recommended.
Each WS unit must authorize an employee who will represent them in the agreement. This representative should be part of the unit. The representative works with the employer in the application process and responsible for communicating needs or issues/concerns from the employees to the employer.
How do I Apply?
To apply for WS, employers must:
- Complete the application form, which includes attachments and signatures of employer and employee representatives;
- Submit a recovery plan designed to return the WS unit(s) to normal working hours by the end of the WS agreement;
- Include a list of employees included in the WS unit;
- Have a recent decrease of 10% or more of company’s business activity, to a maximum of 60%;
- Provide a record of their sales or production figures for the last 24 months;
- Demonstrate that the requested reduction in hours corresponds with the number of anticipated temporary layoffs; and,
- Complete and submit an enrollment sheet which lists all participating employees and their SINs.
Employer responsibilities when engaged in the WS program include:
- Maintaining all existing employee benefits;
- Providing payment of any statutory holiday occurring within a WS period;
- Refraining from increasing workforce during WS agreement; and, Continuing with any scheduled training activities
Although the application can seem onerous for employers, an employment lawyer can help you navigate the forms to take advantage of this program.
Please note the above information is accurate at the time of publication on Thursday, March 19th 2020. However the COVID-19 situation is changing rapidly, along with changes in government legislation. While we will update our information as so frequently as possible, it is possible that future changes in the law can make the above information inaccurate.