COVID-19: Update to CEWS Program

The Government provided an update on the changes to the Canada Emergency Wage Subsidy (“CEWS”) on July 17, 2020. The CEWS previously provided a subsidy to Eligible Employers of up to 75% of the remuneration paid (up to a maximum of $847 per week) if they have certain revenue reductions.


The Government announced the following changes for Periods 5 to 9:


  • A “Base Subsidy” will be available for all Eligible Employers that are experiencing declines in revenues with a subsidy amount varying depending on the scale of revenue decline.
  • A “Top-Up Subsidy” of an additional 25% for those Eligible Employers that have been most adversely impacted.


This new two-part CEWS would apply to active employees—a safe harbour to ensure that employers have access to a CEWS rate that is at least as generous as the initial CEWS structure.


Base Subsidy


Effective July 5, 2020 (Period 5 and subsequent periods), employers affected by COVID-19 would be eligible for the Base Subsidy for active employees. The specified subsidy rate is based on eligible remuneration up to $1,129 per week (remuneration threshold same as previous periods).


The maximum Base Subsidy would be for employers with a revenue drop of 50% or more at a subsidy rate of 60% of the employee’s eligible remuneration. If employers have a revenue drop of less than 50%, then the subsidy rate is decreased. Therefore all Eligible Employers with a revenue decline should qualify.


Below is a table to summarize:



* Employers who would be better off with the previous CEWS rules of a 75% subsidy may be eligible for the Safe Harbour rules for Period 5 and 6 (see below).


The reference periods for the Base Subsidy are as follows:



Top Up Subsidy


Employers that have experienced a revenue drop of more than 50% on a 3-month average would receive a top-up to a maximum of 25%. The revenue drop is done by comparing the revenues in the preceding 3 months to the same months in the prior year (i.e. April to June 2020 versus April to June 2019). There is an alternative approach to compare the average monthly revenue for the preceding 3 months to the average monthly revenue in January and February 2020.


The top-up subsidy would be calculated as:



The reference periods for the Top-Up Subsidy are as follows:



Safe Harbour Rules


For those Employers that would have been eligible for the 75% subsidy based on a revenue decline of 30% or more in Periods 5 and 6 will still be eligible to use the rules that were in place for Periods 1 to 4. Therefore, these Employers should receive the higher of the “old rules” and the “new rules” for Periods 5 and 6.



Furloughed Employees


For Periods 5 and 6, the subsidy calculation would remain the same as for Periods 1 to 4. The subsidy would be greater of 75% of the remuneration paid or the pre-crisis weekly remuneration up to the maximum benefit of $847.


Beginning in Period 7, the subsidy for furloughed employees will be adjusted to align with the Canada Emergency Response Benefit (CERB).





There are no proposed changes to definitions of “Eligible Remuneration,” “Eligible Employers,” or on how to calculate revenues.



More Information


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We will continue to keep you updated as things unfold.