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Accessing Wage Subsidies

Many doctors right now are seeing significant reductions of their incomes as a result of the COVID-19 crisis. If the doctors were on salaries prior to the crisis and have now seen a 30% or greater drop in income for March, and are expecting the same for April and May, then many will be applying for the Canada Emergency Wage Subsidy (“CEWS”). Unfortunately when announced by Justin Trudeau on March 30th it was noted that funding was likely 6 weeks away.

The 75% subsidy has been getting a lot of recognition in the media but not to be forgotten is the 10% Temporary Wage Subsidy (“TWS”). This can help alleviate immediate cash flows issues now while awaiting the CEWS to be legislated.

The subsidy is equal to 10% of the remuneration you pay from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 total per employer. You access the subsidy simply by reducing your monthly payroll remittances. Therefore depending on your wage payments you can reduce your April 15, 2020 payroll remittance by up to $1,375 per employee. It should be noted that the wage subsidy can not be used to lower CPP and EI remittance.

Interaction between CEWS and TWS

For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10 per cent wage subsidy for a period, any benefit from the 10 per cent wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period.

Therefore in any specific pay period you can’t get both subsidies but applying for TWS helps with immediate cash flow as opposed to waiting for 6 weeks.

Should other staff be hired back to take advantage of 75% CEWS?

This is not an easy decision. You have faced a reduction in workload and may no longer need your MOA or other staff members as much as before. However, you may not be laying off staff to allow them to apply for the Canada Emergency Response Benefit as you still need some assistance.

The subsidy amount on eligible remuneration paid between March 15 and June 6, 2020 would be the greater of:

  • 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
  • the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.

Let’s assume your MOA was making $48,000 per year ($923 per week) prior to the crisis but now you only need your MOA 50% of the time. Therefore you are paying $462 per week now instead.

The wage subsidy would be the greater of:

  • 75% of $462 = $346.50; and
  • $462 or 75% of $923 = $692.50, whichever is less which would be the $462.

Therefore 100% of $462 is paid via subsidy. In fact if you paid $692.50 instead of $462 the government would still subsidize the full 100%. As a result there is incentive to help out your loyal staff member who you had to reduce hours by 50% and instead pay 75% of his/her pre-crisis wages.

Now keep in mind the government has announced that “these employers would be expected where possible to maintain existing employees’ pre-crisis employment earnings.” And “anti abuse rules will be proposed to ensure that the subsidy is not inappropriately obtained and to ensure that employees are paid the amounts they are owed.

The government has been reinforcing employers to rehire staff if possible. Would there be “abuse” if the employer paid up to 75% of the pre-crisis wage even if only 50% of the work needed to be done? As legislation has not been released yet it is too early to tell how the CEWS will play out but it is certainly worth keeping the subsidy in mind when determining how much pay to provide during these difficult times.

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