March 20, 2020

Ten FAQs related to COVID-19 for Canadian businesses

Here, e2r’s Stuart Ducoffe provides answers to ten frequently asked questions related to COVID-19 (novel coronavirus), from reducing staff hours to government assistance programs.

1. How should the ROE be completed in the event of a temporary layoff of staff?

Code A should be used as the layoff is caused by a "shortage of work".

2. Is there a one week waiting period for Employment Insurance benefits where the employer has temporarily laid off its staff?

Yes, the one-week period currently remains, but is expected to be waived.

3. What are the consequences if we reduce staff hours?

Subject to contractual provisions permitting a reduction in hours and depending on the extent of the reduction, the loss in hours and earnings can constitute a fundamental change to a fundamental term, thereby triggering a constructive dismissal. In such event, the employee can resign and bring a claim for wrongful dismissal damages.

Considering the current extraordinary circumstance, however, it is highly unlikely employees will pursue such a claim.

4. If staff hours are reduced is there an Employment Insurance program to permit employees to receive employment insurance benefits and their continuing earnings from employment?

Employers may wish to give consideration to the Employment Insurance Work-Share Program which is designed to help employers avoid layoffs. The measure provides income support to employees eligible for Employment Insurance benefits who work a temporarily reduced work week. The employees must agree to a reduced work schedule and to share the available work over a specified period of time, which has now been extended to 76 weeks.  

5. If employees are temporarily laid off and collect Employment Insurance benefits, can the employer top up these benefits?

If the employer tops up employment insurance benefits received by the employees, such payments are deducted from the employment insurance benefits received by the employee. To avoid the deduction, employers can pay the employees through a Supplementary Unemployment Benefit (SUB) plan.

The SUB plan must, however, be registered with Service Canada.

6. If an employee is unable to work because the employee has contracted the coronavirus or the employee is subject to quarantine or self- isolation, can the employee collect Employment Insurance benefits?

Yes, the employee can apply for Employment Insurance Sickness Benefits provided the employee has accumulated sufficient insurable hours. The benefits are 55% of an employee’s insurable earnings up to a maximum of $573 per week less applicable taxes. The employee can claim these benefits for a maximum period of 15 weeks. 

The waiting period of one week is expected to be waived.

Related: Key legal and HR considerations Canadian employers need to think about for COVID-19

7. If an employee is unable to work because the employee has contracted COVID-19 or the employee is subject to quarantine or self-isolation and does not qualify for EI benefits (inadequate insurable hours), is there a government program available to assist?

Yes, the Government of Canada’s COVID-19 Economic Response Plan includes the Emergency Care Benefit (ECB). It provides for up to $900 bi-weekly for up to 15 weeks. The ECB will be effective April 2020. Application for the benefit is through the Canada Revenue Agency, My Service Canada Account or by phone.

8. If an employee is a parent and is required to care for or supervise children due to the school closures, and unable to earn income, is there a government program to assist?

Yes, the Government of Canada’s COVID-19 Economic Response Plan includes the Emergency Care Benefit (ECB). It provides for up to $900 bi-weekly for up to 15 weeks. The ECB will be effective April 2020. Application for the benefit is through the Canada Revenue Agency, My Service Canada Account or by phone. Note: This benefit is not available under EI. The ECB is the only government program offering this type of assistance.

9. Is an employer required to maintain benefit coverage such as medical and dental coverage during a period of temporary layoff?

Although any requirement to maintain benefit enrolment during the temporary layoff period may be subject to contractual provisions or applicable policies, and subject to the constructive dismissal discussion above, group benefits are typically maintained by employers during this period, although not required by statute.

The maintaining of group benefit enrolment in some jurisdictions. For example, doing so in Ontario is very valuable as it permits the extension of the period of the temporary layoff before it becomes a deemed termination.  

10. I understand the COVID-19 Economic Response Plan includes support for small businesses. What is this support?

Yes, the Economic Response Plan provides for a wage subsidy equal to 10% of remuneration paid for a period up to three months. The maximum subsidy is $1,375 per employee and $25,000 per employer. The program will involve a reduction of income tax remittances withheld on their employees’ remuneration. More details are necessary to clarify the administrative processes. Employers benefiting from this measure include corporations eligible for the small business deduction, as well as non-profit organizations and charities.

Learn more about key legal and HR considerations for Canadian employers related to COVID-19. Watch our recent webinars.

Stuart Ducoffe

Stuart Ducoffe (B.C.L., LL.B.,CHRL) is a seasoned employment and labour lawyer as well as the co-founder of e2r®, which powers Ceridian HR Advisory Services. He is also a partner and co-founder of Woolgar VanWiechen Cosgriffe Ducoffe LLP and leads the firm's employment and labour law practice. Follow @e2rSolutions on Twitter to stay up to date on Stuart and his team!

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