As they contend with the global crisis caused by COVID-19, employers are increasingly welcoming such support mechanisms as the Supplemental Unemployment Benefit Plan (SUBP) and the Work-Sharing special measures. But making sense of it all isn't easy. To help guide you, here are four (4) frequently asked questions regarding these support mechanisms and our team's answers.
Supplementary unemployment benefit plan
1) Can employers pay unemployment benefits to their employees in addition to those paid under employment insurance? If so, how?
- Employers can pay supplemental employment insurance benefits to their employees during the period of unemployment resulting from a temporary layoff that is related to a work shortage, illness or quarantining by establishing an SUBP to that end. Employers will be responsible for financing their SUBPs.
- An SUBP can be registered with Service Canada, provided certain requirements are met and a form is completed to that effect. In all cases, the SUBP must be approved by Service Canada before it comes into effect. Amounts paid under an SUBP that is registered with Service Canada will not be deducted from the employment insurance benefits that employees receive, as they do not constitute "remuneration".
2) How are supplemental unemployment benefits (SUB) paid under a plan?
- Employers must issue a record of employment indicating that the employee is entitled to SUBs by entering "SUB plan benefit" in the "other monies" section. Before paying SUBs to their employees, employers must verify that the employees are in fact receiving employment insurance benefits.
- The value of these SUB payments can be indicated either as a percentage of the employee's normal weekly earnings or as a fixed amount. These payments must also be made periodically (not as a lump sum).
3) What is the maximum amount of unemployment insurance that can be paid to an employee under the SUBP without that employee's employment insurance benefits being reduced?
- The combined weekly payments received from employment insurance and the SUBP put in place by the employer must not exceed 95% of the employee's normal weekly earnings. At the present time, the basic EI benefit rate is set at 55% of the weekly insurable earnings, up to a maximum payment of $573 per week.
- Here is a sample SUB calculation posted on the federal government's website:
Example 1: SUB payable when the employee is receiving regular, training or sickness benefits and has no other earnings.
A. Employee's normal weekly
B. Employee's other earnings: $0
C. 95% of normal weekly earnings: $950
D. Maximum EI payment: $573
E. Calculation of maximum SUB payment (C – D = E): $377
4) Can an employee be forced to reimburse employment insurance benefits received?
- Usually, payments under an SUBP registered with Service Canada are not deducted from EI benefit payments.
- However, employees whose net income (including employment insurance benefits and SUBs) exceeds $67,750 for 2020 (namely 1.25 times the maximum yearly insurable earnings) may be required to repay some of the EI benefits received.
Work-Sharing special measures
(1) What are the new Work-Sharing special measures?
- Aside from the new special measures adopted by the federal government, a Work-Sharing program initially aims to avoid layoffs when there is a temporary decrease in the employer's normal business activity. The goal is to reduce the employees' normal working hours and share the available work equally amongst them.
- Under a Work-Sharing program, from March 15, 2020 up to March 14, 2021, special temporary measures will be in effect in response to the downturn in business due to COVID-19. These measures (1) extend the maximum duration of a Work-Sharing agreement from 38 weeks to 76 weeks, (2) waive the mandatory waiting period between two applications for Work-Sharing filed with Service Canada, and (3) ease the recovery plan requirements for the duration of the agreement, notably as regards what recovery measures are to be taken.
2) Which employers and employees may benefit from the temporary Work-Sharing special measures and how?
- The Work-Sharing program is a three-party agreement between
employers, employees (or their union) and Service Canada. More
specifically, employers will be eligible for the temporary
Work-Sharing special measures in response to COVID-19 if
- Are experiencing a recent decline in business activity of at least 10%;
- Are experiencing a recent decline in business activity directly or indirectly related to the impact of COVID 19, and the downturn in the forestry, steel and aluminium sectors;
- Demonstrate that the shortage of work is temporary, beyond their control and not a cyclical or recurring slowdown;
- Have been a year-round business in Canada for at least two years;
- Are private businesses, publicly held companies or not-for-profit organizations;
- Have at least two employees in the Work-Sharing unit; and
- Are willing to implement a recovery plan to support the
on-going operations and viability of the business.
- This Work-Sharing program, as temporarily modified by special
measures, is accessible to employees who:
- Are year-round, permanent full-time or part-time employees needed to carry out the day-to-day functions of the business (the employer's "core staff");
- Are eligible to receive EI benefits;
- Agree to reduce their normal working hours by the same percentage and to share the available work.
3) What benefits are employees entitled to under a Work-Sharing program?
- Employees participating in a Work-Sharing program will benefit from the equivalent of: (i) what they would have received under employment insurance had they not worked, and (ii) the salary that would have been paid to them by their employer had they been required to work.
- For example, if an employee's annual salary exceeds $54,200 (namely, the maximum yearly insurable earnings) and is called upon to work two days a week, the employer will pay his or her regular salary for these two (2) work days, and the employee will receive $343.80 in employment-insurance benefits for the remaining three (3) days not worked, namely 3/5 of $573 (the maximum weekly insurable earnings).
4) How can you apply for the Work-Sharing program and within what timeframe?
- Before filing an application, employers must provide their
employees with a copy of the Employee Annex. Here are the documents
to complete in the context of an application:
- Application for a Work-Sharing Agreement (including a Word or Excel document providing the business's sales and/or production figures, including employment levels, for the last 24 months and the numbers for the month preceding the application);
- Attachment A – Work-Sharing Unit; and
- Attachment B – Recovery Plan for special measures.
- Once completed in accordance with the applicable terms and conditions, these documents must be submitted at least ten (10) calendar days before the requested commencement date of the Work-Sharing agreement. Note that all agreements begin on a Sunday. Once their application is approved, employers will have several obligations for managing their Work-Sharing program.
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