The federal government’s newly revised 75% Canada Emergency Wage Subsidy (CEWS) now has a price tag attached to it: $71 billion.

Today, on Wednesday, April 1, 2020, the following details (that can also be found on the Government of Canada website) were announced for the proposed CEWS program:

  • The Canada Emergency Wage Subsidy will apply at a rate of 75% of the first $58,700 normally earned by employees – representing a benefit of up to $847 per week. The program would be in place for a 12-week period, from March 15 to June 6, 2020.
  • Eligible employers who suffer a drop in gross revenues of at least 30 per cent in March, April or May, when compared to the same month in 2019, will be able to access the subsidy.
  • Eligible employers will include employers of all sizes and across all sectors of the economy, with the exception of public sector entities.
  • For non-profit organizations and registered charities similarly affected by a loss of revenue, the government will continue to work with the sector to ensure the definition of revenue is appropriate to their circumstances. The government is also considering additional support for non-profits and charities, particularly those involved in the front line response to COVID-19. Further details will be announced in the near term.
  • An eligible employer’s entitlement to this wage subsidy will be based entirely on the salary or wages actually paid to employees. All employers would be expected to at least make best efforts to top up salaries to 100% of the maximum wages covered.
  • The CEWS will not replace the previously announced 10% temporary wage subsidy. For employers that are eligible for both subsidies for a period, any benefit from the 10% wage subsidy an employer receives is expected to reduce the amount available to that employer from the CEWS. 
  • Employees will not be able to receive both the CEWS and the Canada Emergency Response Benefit (CERB). 

Finance Minister Bill Morneau stated that businesses will be able to apply for the wage subsidy through an online portal soon to be available through the Canada Revenue Agency website.

For now, Morneau urges companies to rehire employees quickly while relying on extra credit to bridge the gap until they receive the CEWS - since businesses will need to show that they are paying their employees in order to be eligible for the subsidy.

More details on how to apply for the program are still to come. See this government backgrounder for more information on the sage subsidy. 

Small Business is Concerned

The Canadian Federation of Independent Business says that there are “several design features and unanswered questions that may prevent the (wage subsidy) program from meeting its intended goal of reducing layoffs.”

Many new and seasonal businesses will find it challenging to prove a 30% decline figure. And for some businesses with tight profit margins, even a very small drop in sales will require significant layoffs to lower costs. 

It's also concerning that even when the application portal is up and running, Canadian businesses will have to wait approximately 6 weeks to receive money from the new federal wage subsidy program.