Employers are now looking for options to maintain employees while reducing employment costs. One program that many are talking about is the Work-Sharing (WS) program. This is an Employment Insurance (EI) program that helps employers and employees avoid layoffs when there is a temporary decrease in business activity beyond the control over the employer. The program provides EI benefits to eligible employees who agree to reduce their normal working hours and share the available work while their employer recovers.
What does this benefit amount to? If a Work-Share unit agrees to reduce hours by 35% the employer would continue to pay 65% of their wages (saving 35%) and EI would cover 55% of the 35% so that the employee receives ~84% of their normal pay. (It should be noted that there is an EI earnings threshold to consider for higher salaries. If the employee’s 2019 net income exceeds $66,375 they may be required to repay 30% of the income received in excess of this amount. This is a consideration for the tech sector especially where salaries are generally higher.)
So assuming the above sounds of interest, here is a high level rundown of what employers need to know or at least help you quickly rule it out as it is not applicable for many small businesses given some criteria restrictions.
To be eligible, you must be a year-round business (in Canada for at least 2 years) experiencing recent decline in business activity of at least 10% related to the impact of COVID-19. So if your revenues, pipeline, or production has dropped by at least 10% you are eligible. I think it goes without saying that you would not be reading this if this were not the case.
Work-Sharing is a three-party agreement involving employers, employees and Service Canada. Employees must agree to a reduced schedule of work in advance.
So far so good? Next you need to consider the eligibility of your staff. This program is intended for groups of employees with similar job duties, generally including all employees in a single job description or all employees who perform similar work. It is not something that would be able to be applied company wide for a small business given certain eligibility constraints. And it applies to all employees with the same job description. You can’t have some people with the same job description volunteering while others don’t.
The Work-Share (WS) unit can be as few as two employees, but none of these employees can be considered essential to the recovery of the company. Executive level marketing and sales agents, senior management and those holding 40% of the voting shares are excluded.
To be eligible for the EI compensation the employees must be EI-eligible and considered core staff. They are year round employees needed to carry out day-to-day functions. Seasonal workers, or students hired for summer or co-op term are not eligible.
If you’ve gotten this far and you think it still applies, great. Here’s what you need to know: All members of a WS unit must agree in advance to reduce their hours of work by the same percentage and to share the available work. As work increases the additional hours must be shared equally. The WS unit must reduce hours by at least 10% (one half day) to a maximum of 60% (three days). The reduction can vary week to week as long as it remains between 10%-60%.
A WS agreement has to be in effect for at least 6 consecutive weeks up to 38 weeks. There are extension options that enable up to 76 weeks in some cases (approval required).
If you think this program may benefit you, we are including the link to the Service Canada fact sheet which also contains links to simplified applications.