Can you prevent downsizing by accessing government funding?

Having to lay off workers is one of the most agonizing decisions a business owner or manager can make. When revenues plunge suddenly, e.g. as a result of the COVID-19 pandemic, that choice is even more excrutiating. Staying afloat may take precedence over keeping staff aboard.

Downsizing often seems like your only decision—and sometimes it is—but it’s never one you want to make, especially if you’re losing good people who’ve performed well. In addition to leaving you short-handed, it can affect the morale of remaining staff.

In an unprecedented move, our government has increased relief efforts to help business owners keep working and paying employees during this time. Before initiating layoffs, see if you can hold off on downsizing by accessing federal government funding. Canada’s feds have launched, or extended, programs to help you retain staff in extraordinary times.


The Canada Emergency Wage Subsidy

On April 1, 2020, the Government proposed a temporary wage subsidy of 75 percent for qualifying businesses. It is part of Canada’s COVID-19 Economic Response Plan.

Known as the Canada Emergency Wage Subsidy (CEWS), this funding would initially be paid for up to 3 months, retroactive to March 15. The goal is to protect jobs Canadians depend on during difficult times.

CEWS would apply at the proposed rate of 75 percent of the first $58,700 earned by employees. That represents a benefit of up to $847 per week. Employers will have to demonstrate a reduction in revenue of 30 percent each month, in comparison to the same month a year earlier. There are penalties for non-compliant receipt of assistance.

Eligible employers include companies eligible for the small business deduction, non-profit organizations, and registered charities. See Frequently Asked Questions about CEWS on the Canada Revenue Agency site.


Extending the work-sharing program

The Work-Sharing (WS) program is also designed to stave off layoffs during external shocks. It provides income support to employees who work a temporarily reduced work week while their employer recovers.

Our federal government is doubling the maximum duration of WS from 38 to 76 weeks. Also, eligibility requirements have been eased, and the application process has been streamlined.

Note that this is a three-party arrangement involving employers, employees and Service Canada. Proof is required to show that all parties agree. There will be a reduction in work hours for staff who Work-Share of at least 10% to 60%.

WS has several eligibility requirements. This expanded program is effective March 15, 2020, to March 14, 2021. The benefit payable to an employee weekly is based on the employee’s loss in typical average weekly earnings.


Other financial relief for businesses

Both of the above programs directly aim to reduce downsizing. Other federal initiatives help fund employers via loans and tax relief. In part, an employer could use that money to retain their people.

Want to know more about how to hold on to valued employees? Or other strategies to keep your business successful in this challenging time? Keep looking to the Monster Resource Center For Employers. While we cannot guarantee you more funding, our info and advice can certainly make employee retention less taxing.