COVID-19 Future Planning: Work Share, Supplemental Unemployment Benefits and Policies
By Preston I.A.D. Parsons and Kai Ying Chieh
Work Sharing and Supplemental Unemployment Benefits
The BC Restart Plan currently forecasts the progressive re-opening of businesses with COVID-19 measures continuing until September and beyond. At present, certain activities are not expected to resume until a vaccination exists, community immunity is achieved, or broad successful treatments are established. There is also further concern about a potential “second wave” occurring in the fall. We may collectively be in this for the long haul, and it is important to ensure your business is aware of all of its options for operational flexibility moving forward.
Two federal programs that already existed before the COVID-19 pandemic that may be of benefit to the right employers in the coming months include the Work-Sharing Program and the Supplemental Unemployment Benefits Program. In this newsletter, we will provide some background on these programs to assist employers in planning for the months ahead.
The Work-Sharing Program is a federal program intended to prevent layoffs in circumstances where there is a temporary decrease in business activity beyond the control of the employer. Employers facing business constraints as a result of COVID-19 and who anticipate that they will need to reduce operations accordingly may benefit from setting up a Work-Sharing Program.
In general, Work-Sharing permits a group of employees who have similar job duties to collectively and equally agree to reduce their hours of work by 10-60% over a specific period of time. As part of the agreement, the Government of Canada will provide some Employment Insurance benefits to eligible employees.
Eligible employers must meet the following criteria:
- A year-round business in Canada for at least one year;
- A private business, publicly held company or a not-for-profit organization; and
- Have at least two employees in the Work-Share unit.
Note that eligible employees must be year-round, permanent, full or part-time employees needed to carry out the day-to-day functions of business and must be eligible to receive Employment Insurance benefits. Seasonal, co-op, temporary or casual employees are not eligible. There is a further exclusion for certain key employees responsible for the direction of the company and who hold more than 40% of the voting shares in the business.
As a result of temporary special measures introduced in response to COVID-19, the maximum duration of Work-Sharing Programs has extended from 38 weeks to 76 weeks. In addition, while Work-Sharing could not previously commence until 30 days after an application was submitted, it can now start 10 business days after application.
For more specific information on the application process and the forms that employers must submit to apply for Work-Sharing, please see this website by the Government of Canada.
Supplemental Unemployment Benefits (SUB) Program
We have received a number of inquiries from employers asking whether they can “top-up” employees’ salaries while they collect EI benefits. Typically, EI benefits cannot be topped up by the employer unless the employee is on a limited form of leave, such as maternity leave. With respect to the recent federal benefits put in place, employers cannot “top up” the Canada Emergency Response Benefit (CERB) payments received by an employee, but the employee can be earning up to $1,000.00 before being disqualified from receiving CERB. By comparison, employers who are eligible to participate in the Canada Emergency Wage Subsidy (CEWS) Program are in fact required to do their best to top up the subsidy amounts where possible. Of course, both the CERB and CEWS are intended to be temporary, after which the country is expected to revert to the pre-COVID-19 EI regime.
One way for employers to top up employees’ salaries while they collect EI benefits, is to register for the SUB Program. The SUB Program is a federal program that allows employers to supplement the Employment Insurance benefits paid to employees. A registered SUB Plan may be established so that employees receiving EI regular benefits for a temporary stoppage of work or EI sickness benefits for illness, injury, or quarantine can be “topped-up” by the employer. Without a registered SUB Plan, any payments made to employees who are collecting EI benefits will generally be considered income and will be deducted from their benefits.
Employers considering the implementation of a registered SUB Plan must take a number of steps and ensure that the Plan complies with the Program requirements. Among other requirements, note that the Plan must:
- identify the specific groups and/or positions of employees covered;
- indicate which types of unemployment it covers (i.e., temporary stoppage of work, training, illness, injury and quarantine);
- indicate that the employee must apply for and be in receipt of EI benefits, but notwithstanding this requirement it must indicate if the employer may provide SUB payments to employees who are not yet receiving EI benefits, for example if the employees are in the one-week EI waiting period;
- indicate the value of the payments and comply to certain payment requirements, including that the SUB payment plus the applicable EI benefit rate cannot exceed 95% of the employee’s normal earnings;
- indicate the maximum number of weeks for which the SUB payments will be paid, as well as a start and end date for the Plan; and
- indicate the method used to finance the SUB payments, such as whether they will be made from the general revenues of the company, deposits into a trust fund, or by paying insurance premiums.
The employer must submit a copy of the Plan to Service Canada for approval. If applicable, the employer must also submit a copy of any applicable collective agreement; a copy of the relevant section of an insurance policy or any other documents used to administer the SUB Plan; a copy of the Trust Agreement; and a copy of any company policies and/or guidelines related to the SUB Plan and any documents the employees may need to sign in order to receive the payment.
The employer must receive approval from Service Canada before the implementation date of the Plan. If employers provide top-up payments to employees before the Plan is registered, those amounts may be deducted from the employee’s EI benefits.
If the restrictive measures associated with the COVID-19 crisis continue over a longer period, employers may wish to make the necessary arrangements for a SUB Plan. It is vital that employers who are considering registering a SUB Plan in order to set up a “top-up” of employees’ EI regular or sickness benefits ensure that their Plans meet the formal requirements, and prepare to submit all relevant documentation accordingly.
For further details on the requirements of SUB Plans, a sample for the use of employers, and the contact information for submitting Plans for registration to Service Canada, please see this guide from the Government of Canada.
The rapid onset of the COVID-19 pandemic left many businesses scrambling to adapt workflows and employee work locations. Remote work, wherever possible, continues to be implemented in this new reality requiring physical and social distancing; however, many businesses did not have the policy framework in place to make the transition in an organized manner, let alone in a manner that ensures compliance with legislation and protects the business from risk.
The sudden shift has resulted in the use of more personal devices for work, more company electronic equipment at home, work being done on home internet connections instead of within the office’s firewalls, an acceleration of the decentralization of company property, documents, and data away from the company’s primary physical office site, and more.
As businesses continue to adapt and learn how to move forward in this new, hopefully temporary ecosystem, it is prudent to consider filling in policy gaps by implementing policies on the following subjects, if they are not in place already:
- Bring Your Own Device (BYOD) (if applicable)
- Privacy and Record Retention
- Remote Work (and access to remote systems)
- Social Media Policy
- Home Office Expenses
- Network and Technology Use
Unwritten expectations and unspoken agreements continually cause issues in employment relationships. To the extent that obligations and expectations can be clearly set out in written policies, an employer is in a much better position to manage the workplace and to bolster their defences in the event litigation arises.
The past few months presented many lessons for employers. The upcoming months are an opportunity to put those lessons into action and our firm is here to assist you in planning for your future.