Over the last two days, the Prime Minister has announced coming changes to the Canada Emergency Response Benefit, new benefits for low-income essential workers, and additional financial supports for small businesses. Although the details of the coming changes and new benefits have yet to be formalized, here is a summary of what has been announced.
CHANGES TO THE CANADA EMERGENCY RESPONSE BENEFIT (CERB)
The initial roll-out of the CERB was designed to quickly get money into the hands of individuals who lost work because of COVID-19. Now that the CERB has been implemented, the government is fine-tuning the benefit to enhance it and make it available to more workers.
Ability to Earn Limited Income While Receiving the CERB
The eligibility requirements for the CERB currently require an applicant to be without income for 14 consecutive days in a benefit period. One of the changes that has been announced is that CERB recipients will be able to earn a limited income of up to $1,000 per month while collecting CERB. This suggests that the eligibility requirements may change as well, such that individuals who have not experienced a complete loss of income (putting them below the $1,000 per month threshold) may also become eligible.
One issue with the CERB (as opposed to Employment Insurance) was that employees who were laid of from their work with employers who had a Supplement Unemployment Benefit (SUB) Plan were unable to take advantage of the “top-up” from the employer. This ability to earn limited income while receiving CERB should enable employers to subsidize employee wages to an extent while the employees are in receipt of the CERB, similar to a SUB plan, as long as the employee does not earn over $1,000 per month from all sources.
Extension of CERB Eligibility
The benefit was initially limited to individuals who had ceased working for reasons related to COVID-19. The benefit will be now be extended to:
- seasonal workers who have exhausted regular EI benefits and who are unable to undertake their usual seasonal work because of COVID-19; and
- workers who recently exhausted their regular EI benefits and are unable to find employment or return to work because of COVID-19.
TOP-UP FOR LOW-INCOME ESSENTIAL WORKERS
The federal government also recognized that many individuals who have continued to work during the pandemic are earning an income that may be less or similar to the income support available through the CERB program. The federal government will be working with the provinces and territories to establish a mechanism to top up the salaries of essential workers earning less than $2,500 per month. The details of how this will be rolled out, including the amount of the benefit and how it will be applied for and delivered, have yet to be established.
ADDITIONAL SUPPORTS FOR SMALL BUSINESSES
Eligibility for the Canada Emergency Business Account (CEBA) will be extended, and a new Canada Emergency Commercial Rent Assistance (CECRA) program for small businesses will be established.
Canada Emergency Business Account (CEBA)
The CEBA loan program is being implemented through financial institutions and offers eligible small businesses and not-for-profits up to $40,000 in a government-funded, interest-free, loan. Loan funds are restricted to being used for non-deferrable operating expenses, such as payroll, rent, utilities, insurance, property tax and regularly scheduled debt service. If the loan is repaid by December 31, 2022, twenty-five percent (25%) of the loan (maximum of $10,000) will be forgiven and no interest will be charged. After December 31, 2020, the loan can be converted to a three-year term loan at 5% interest.
To date, the CEBA has only been available to businesses that paid between $50,000 and $1,000,000 in total payroll in 2019. The eligibility range is now being extended to between $20,000 and $1,500,000 in total payroll.
Canada Emergency Commercial Rent Assistance (CECRA)
The CECRA will be a program to provide loans, including forgivable loans, to commercial property owners that agree to lower or forgo the rent of small businesses for the months of April, May and June. Since rent issues fall under provincial government jurisdiction, the federal government will be working with the provinces and territories to establish the program and to increase rent support for businesses that are impacted by COVID-19.
We continue to monitor the various supports as they are announced and formalized, and will make further information available as it becomes available
The Labour & Employment Team at Cunningham Swan