OKT: Can my Indigenous Government or Organization Use the New COVID-19-related Federal Programs for Employment and Unemployment?
In the wake of COVID-19, a lot is going on. Many Indigenous governments and organizations are struggling to deal with this public health emergency, such as putting travel restrictions in place, circulating public health information, and figuring out how health and other essential services will be delivered.
They are also employers. The shutdown or reduced operations of, well, almost everything these days has affected Indigenous governments and organizations too, and their employees.
This blog has information on two new federal programs designed to help with employment and unemployment. It focuses on questions for Indigenous governments and other Indigenous organizations (non-profits, businesses, charities).
Please note that information is still evolving, and this blog may need to be updated accordingly.
There are two major programs to discuss:
- Canada Emergency Wage Subsidy (CEWS) – This is to help employers keep people on their payroll. It is paid to employers.
- Canada Emergency Response Benefit (CERB) – This is to help people who are no longer being paid by an employer. It is paid to individuals. It is similar to EI but has differences, as discussed below.
- Help for Employers to Keep People on their Payroll – Canada Emergency Wage Subsidy (CEWS)
The Canada Emergency Wage Subsidy is a subsidy paid to eligible employers. The goal is to help the employer keep people on their payroll.
The first question is whether the employer has lost 30% of its revenue due to COVID-19. Some details on how that will be assessed are described at the link above, and more are expected to come. The 30% test is a threshold question. If it is not met, there is no eligibility for this program.
If that lost revenue threshold is met, the amount of the subsidy is generally 75% of each employee’s gross pay, up to a maximum of $847/week per employee, for up to 12 weeks. If the employer qualifies, it applies to all of their paid workers. There is no overall maximum for the employer as a whole. The employer must pay the remainder of the employee’s salary.
There are some finer points about the 75% mark; please consult the link for details.
Assuming the 30% lost revenue test is met, what kind of employers will be eligible? From what we know so far:
- It looks like First Nations and Indigenous governments will not be eligible. It says that “public bodies” would not be eligible. Many First Nations qualify as a public body performing a function of government, which is a category for tax purposes. Also First Nations would not be in the following list of eligible types of employers: “individuals, taxable corporations, and partnerships consisting of eligible employers as well as non‑profit organizations and registered charities”. Hopefully most First Nations will not lose 30% or more of their revenue, given heavy reliance on government sources of funding. However some First Nations that have a high proportion of own-source revenue may feel a significant financial impact from COVID-19, but it looks like they would not be eligible for this wage subsidy.
- Non-profits and charities of all kinds will be eligible (assuming the 30% lost revenue test is met). This could potentially include tribal councils, regional organizations, PTOs, separately incorporated education authorities or health authorities, Indigenous post-secondary institutions, and Indigenous NGOs of all kinds. However, we will need more detail on “public bodies”, which it says will not be eligible. In some cases, this might exclude some Indigenous organizations, especially those that have qualified under the Income Tax Act as a public body performing a function of government.
- Indigenous businesses such as sole-proprietorships and for-profit corporations will be eligible (again, assuming the 30% lost revenue test is met).
The program is going to be administered by the Canada Revenue Agency. Details are still to come. The previous version of the program suggested that waiving remittances would be used to access it. Given the larger scale of the program now, they may go beyond that.
If an employee is exempt from tax because they have Indian Act status and are earning income on a reserve, will the employer be able to access this wage subsidy for that employee? We think so. On the basis of the previous rules (before the program expanded to 75%), the answer was “yes”. We don’t think the federal government intends to exclude these employees. In some cases, there may be practical difficulties to access, such as if an employer does not normally deal with the CRA. We will check back when further information is available.
We recommend that employers considering the impact of COVID-19 on their workplace may wish to get legal advice.
- Help for Individuals Who Lost Paid Work – Canada Emergency Response Benefit (CERB)
The Canada Emergency Response Benefit (CERB) is for people who are no longer being paid from work, for reasons due to COVID-19. For instance, they could have been fired, temporarily laid off, or on an unpaid leave due to illness or caregiving obligations. They could also be self-employed and no longer able to earn an income.
It is paid to the individual, not to their current or previous employer.
This program is being managed by Service Canada in tandem with the Employment Insurance (EI) program. Starting April 6th, there will be one website with a single portal to access either program.
You cannot get both EI and CERB at the same time. The CERB replaces EI for a large set of people who lost paid work due to COVID-19.
Here are some differences between the CERB and EI:
- CERB will be available to a wider group of people than EI. EI is only available to people who paid into the program and meet the test for qualifying hours. CERB will be available to anyone age 15 and over who lost all their paid income due to COVID-19 and who made at least $5000 in the previous year. (This is a summary; please consult the link above.) It does not matter whether the person is Indigenous or not, has Indian Act status or not, lives on a reserve or not, or whether or not their previous income was tax exempt. Even if the person did not pay into EI, they could still be eligible.
- CERB will pay the same amount for each person in the program: $500/week. EI, in contrast, pays 55% of the person’s average income, up to a maximum of $573/week. Note that many people will earn more on the CERB than they would have on EI, but some people (those with higher salaries) will earn a bit less. This will not be optional.
- CERB is paid every 4 weeks. EI is paid every week.
- CERB will be available for up to 16 weeks per person (up to 4 payments). In contrast, the length someone can be on EI varies according to their qualifying hours and also according to the unemployment rate in their region.
- CERB starts after you have lost income for 2 weeks. EI starts after a 1-week waiting period, or no waiting period if the person is quarantined due to COVID-19.
If a person is eligible for CERB, they will get that instead of EI. However, they do not lose their entitlement to EI. If they were entitled to EI, and they use up their 16 weeks of CERB payments and still need help, they will be able to start using their EI.
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