It’s All About Timing: Covid-19 Layoffs and Navigating EI, the CERB and the EWS

If you have been following the news, you will know that the Canadian Emergency Response Benefit (CERB) is now available for employees laid off since March 15, 2020 as a result of the Covid-19 crisis.  Employees laid off before March 15, 2020 will be enrolled in the regular EI stream.  Employees laid off since March 15, 2020 who apply for EI will be rolled over to the CERB program.

In addition, the Emergency Wage Subsidy (EWS) is available to employers, which provides eligible employers up to 75% of wages paid for the first $58,700 per employee for up to 12 weeks and retroactive to March 15, 2020, subject to some limitations and qualifications noted below.

Many commentators have noted a significant gap in coverage between the EWS and the CERB.  There is still no clarity as to whether an employer could ‘top-up’ a laid off employee while they are in receipt of CERB.  It appears that this will not be an available option in the current iteration of the program.  As with the EI program, the claimant must make periodic declarations to continue to qualify.   In CERB the claimant must declare that they do not have any work or earnings for the first two weeks and thereafter they must declare that they do not expect to have work or earnings in the subsequent and successive two-week periods.  This is a significant disadvantage over the EI program which clearly allowed a declaration of earnings during an EI week (after the first out-of-work qualifying week), although the benefit payable may be reduced depending on the earnings declared in that week.

Further, the CERB benefit is ‘fixed’ at $500.00 per week.  Therefore, if the EI benefit would have been higher, then that employee’s benefit will drop from the EI benefit which maxed out at $573.00 per week, to the fixed CERB of $500.00 per week.  An EI claimant whose benefit was less than $500.00 per week will be bumped up to the CERB benefit at $500.00 per week.  A claimant cannot double-up the EI with the CERB; they get one or the other, depending on the timing of their application.  If a claimant receives the CERB, they continue to qualify for EI after the CERB program is finished on October 3, 2020.

As well, another significant gap is revealed in the EWS program as it has been announced for roll-out so far.  In conjunction with the CERB, it does not allow for the part-time hire back of employees.  The EWS will not be available to an employer with respect to an employee claiming the CERB.  In other words, if an employee has been laid off after March 15, 2020, and the employee has applied for EI or CERB after that date, the employer will not be able to hire back part-time or pay part salaries and still have the employee qualify for any part of the CERB.

This, along with the two-week no-work qualifying period and benefit reduction from EI, means that, in fact, the CERB, is of significantly less value than the original EI for many businesses and employees as a tool to address the particular issues arising as a result of Covid-19.  It’s an all or nothing program that does not allow for any nuance with respect to partial work or partial layoff.  It will work well for the retail and food service categories but much less so for the service sectors and other retails sectors who may experience reduced revenue, and will need some staffing but cannot afford to maintain full-time staff.

These gaps have been pointed out to the government who might respond by tweaking both the CERB and the EWS in the coming days and weeks.

What does this mean for you?

If you expect to be able to conduct some business during the crisis at reduced revenues, it is ostensibly advisable to offer a very limited number of key staff members full time re-employment so that you may be eligible for the EWS with respect to these employees while maintaining the CERB qualification for the rest of your laid off staff. This appears to be the option providing the best efficacy with respect to the conduct of business while maintaining eligibility for government assistance in response to the pandemic.

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