Work-Sharing fact sheet for employees - COVID-19 temporary special measures

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Work-Sharing is a program supported through the Employment Insurance (EI) fund, that assists employers to face cutbacks and avoid layoffs. The reduction of employment must average between 10%-60% of a normal work week over the life of the agreement. In order to help compensate for reduced income from the employer, the Canada Employment Insurance Commission (the Commission) assists EI eligible workers to collect Employment Insurance benefits.

Work-Sharing agreement definition

During a Work-Sharing agreement, available work is redistributed through a voluntary reduction in hours worked by all employees within one or more work units. This enables the employer to retain a full work force on a reduced work week rather than laying off part of the work force.

Duration of a Work-Sharing agreement

Work-Sharing is a temporary measure. Usually, Work-Sharing agreements can be a minimum of 6 weeks and a maximum of 26 weeks in duration. In extenuating circumstances, an extension of up to 12 weeks to the agreement may be considered and approved by Employment and Social Development Canada (ESDC).

A temporary special measure for COVID-19 has been put in place providing an extension of another 38 weeks, with a maximum of 76 weeks, to all businesses across Canada that are directly or indirectly impacted by the downturn in business due to COVID-19.

Eligibility for Work-sharing agreements

Employers and employees must agree to participate in Work-Sharing and apply together.

Employers

To be eligible for a WS agreement, your business must:

Eligibility was also extended to:

Your business is not eligible for WS if it is experiencing a reduction in business activity due to:

And if you are a:

Employees

To be eligible for WS, your employees must:

Eligibility was also extended to:

Employees are not eligible if they are:

Eligibility of employers in the not-for-profit sector

Employers in the not-for-profit sector who are experiencing a shortage of work due to reduced business activity and/or reduced income levels as a result of COVI-19 will be eligible to access the program.

New employee eligibility guidelines

Government Business Enterprises (GBEs), also referred to as public corporations, will now be eligible to access the Work-Sharing program.

Government owned establishments engaged in activities that are not purely governmental in nature, are usually classified to the same industry as privately owned establishments engaged in similar activities, and are now eligible for Work-Sharing.

This temporary expanded eligibility excludes employers that operate solely for the purposes of carrying out the administration of government programs and activities that are purely governmental in nature.

Expanding eligibility to staff essential to the recovery

In the context of COVID-19, employees now considered essential to the recovery and viability of the business can now considered be eligible to participate for Work-Sharing. Examples of employee now eligible includes:

New temporary special measures for Work-Sharing

On March 11, 2020, the Government of Canada announced that it would make available over $1 billion for a whole-of-government response to the effects of COVID‑19 on Canada’s people, economy and businesses.

As such, the temporary special measures to support workers and employers affected by COVID‑19 includes the following:

Eligibility requirements for employees to take part in a Work-Sharing agreement

The eligibility requirement for Work-Sharing is the same as for regular EI Benefits. Employees must have 420 - 700 hours of insurable employment during their qualifying period which is the 52 weeks prior to the start of their EI benefit period. The exact number of required hours depends on the unemployment rate in the EI economic region where employees live.

Each employee in the Work-Sharing unit must experience a reduction of their normal work hours. This reduction may be between 10% and 60% over the duration of the agreement. Consequently, each employee must work a minimum average of 40% (2 days) of their normal weekly hours over the life of the Work-Sharing agreement.

Work reduction of employees exceeding 60%

The employee’s work reduction cannot exceed 60%. Under the Work-Sharing Program, the employer must agree to a reduction in the employees’ regular work schedule ranging between a minimum of 10% and a maximum of 60% on average, over the life of the agreement.

For example, in a regular 40-hour work week, the projected reduction in hours must be a minimum of 4 hours per week (10%), or a half day, and the projected maximum weekly reduction cannot exceed 3 days per week or 24 hours (60%). 

Benefits for employees in a Work-Sharing agreement

When a company faces difficulty beyond its control and is forced to cut back production, it may have only two courses of action. It can either lay off workers temporarily or make an agreement with the affected employees and the Commission to participate in a Work-Sharing arrangement.

Work-Sharing benefits employees by

Party who submits an application for a Work-Sharing agreement

Employers and workers must agree to participate in Work-Sharing and submit a joint application to ESDC. For any extension of the agreement or addition/deletion of Work-Sharing participants, the employer or the union/employee representative and ESDC all must agree. At any time during the agreement the employer, the union or employee representative or ESDC have the right to terminate the Work-Sharing agreement.

Employer’s responsibilities in a Work-Sharing agreement

The employer is responsible for scheduling hours of work. The employer will be responsible for reporting Work-Sharing hours on a bi-weekly basis. Any changes to the original agreement, including the addition or deletion of workers, should be reported to Service Canada immediately. Work-Sharing agreements do not affect workers’ entitlement to regular EI Benefits if they happen to be laid off after the agreement ends.

Establishment of the Employment Insurance benefit rate

The EI benefit rate for each employee is established at the start of the Work-Sharing agreement after the submission of a claim. The benefit rate is established in the same manner as the benefit rate for all other EI claims.

The Work-Sharing benefit payable in any given week is based on the employee’s loss in normal average weekly earnings. It is expected that workers will make themselves available for work that is offered to them while participating in Work-Sharing. Earnings received from sources other than Work-Sharing need to be reported by each claimant.

Employment earnings that are not from the Work-Sharing employer will be deducted from the Work-Sharing benefits payable based on the existing working while on claim provisions.

Employees receiving EI benefits

Employees who are receiving Employment Insurance regular or special benefits and are called back to work can stop receiving these benefits in order to participate in WS. If not already on the WS agreement, an amendment would have to be done to add employees to an existing agreement and then, they would need to be added to weekly Utilization Reports in order to start receiving WS EI benefits.

Other sources of earnings

The EI working while on claim provisions allow claimants to stay connected to the labour market and earn additional income while on claim. The provisions allow claimants to keep receiving a portion of their EI benefits, along with all earnings from employment or other sources.

Claimants can keep 50 cents of EI benefits for every dollar earned or received while on claim, until their earnings reach 90% of the weekly earnings used to establish their claim. Any earnings above this cap are deducted dollar-for-dollar from benefits. This method is the default rule that automatically applies to all eligible claims.

Note: Specific statutory holidays occurring within a Work-Sharing period are the responsibility of the employer and not compensated by EI benefits.

Employee benefits under a Work-Sharing agreement

The employer must maintain all existing employee benefits for the duration of the Work-Sharing agreement. For example:

However, employees should be made aware that benefits (including any subsequent payout of benefits) may be reduced if calculated based on earnings or hours of work.

Waiting period for Work-Sharing benefits

There is no one-week waiting period for Work-Sharing benefits. However, benefits are processed through the EI payment system, meaning it will take a few weeks for the first cheques to arrive. Every two weeks, the employer must verify each claimant’s EI report card after it has been filled out. This EI report card is used to determine the claimant’s bi-weekly entitlement to Work-Sharing benefits.

Taxable Employment Insurance benefits

EI Benefits are taxable and are subject to the rules and regulations of the Canada Customs and Revenue Agency Act. In certain cases for high-income workers, a portion of the EI benefits under Work-Sharing may have to be repaid when the annual income tax return is filed.

Tax deductions for Employment Insurance Work-Sharing benefits are determined from the information the claimant provides in the Income Tax section of the Employment Insurance application. The amount of tax deducted is specific to the claimant's province, personal tax situation and benefit rate.

The Employment Insurance benefits received by Work-Sharing participants are taxable, however because of the weekly amount of benefits paid, taxes are not always withheld at source. Participants may wish to have their income tax deductions increased in order to avoid having to pay a large amount of income tax at year-end.

This request can be made by phone at the following toll-free number:

For faster service, WS participants need to give Service Canada their Social Insurance Number (SIN).

At the time the participant files their income tax return, depending on their net income, they may be required to repay some of the Employment Insurance benefits received. Benefit repayment requires claimants with a net yearly income exceeding a specified threshold to repay a percentage of the Employment Insurance regular benefits received during the tax year.

For example, if a WS participant’s 2016 net income from all sources exceeds $63,500, they will be required to repay 30% of the lesser of:

Exemptions apply in certain circumstances. For more information on repayment of benefits at income tax time please visit: Employment Insurance (EI) and Repayment of Benefits at Income Tax Time.

Shareholders and Work-Sharing agreement

Yes, shareholders can be part of the WS agreement if they do not hold significant decision-making power and own less than 40% of the company’s shares.

Wages calculation under a Work-Sharing agreement

The amount of benefits paid for a week of Work-Sharing is calculated by comparing the hours of work missed because of the Work-Sharing agreement against the hours the claimant would have normally worked. Benefits are paid as a percentage of hours missed. For example:

In this case, the claimant has worked 30 out of a possible 40 hours. Therefore, 10 out of 40 hours were lost due to the Work-Sharing agreement, or 25%. This claimant will be entitled to 25% of their benefit rate, or $125.00, for the 10 hours missed because of the Work-Sharing agreement.

Work-Sharing unit definition

A Work-Sharing unit is a group of core employees who have agreed to participate in the Work-Sharing program and to reduce their normal working hours. A Work-Sharing agreement may include more than one Work-Sharing unit. Some larger employers may have WS agreements that are comprised of several WS units (included in separate attachment A forms) with different job descriptions or from different departments.

The unit generally includes all employees in a single job description or all employees who perform similar work. Employees who do different work but whose jobs impact one another (for example, slowdown in business affects one job resulting in less work for another job or jobs) may form one WS unit provided that all employees can reduce their hours equally.

The Work-Sharing unit should not include employees who are needed to help generate work and/or employees who are essential to the recovery of the business. For example:

These individuals should be working full-time in support of the company’s recovery plan. Other supervisors and managers are eligible to participate and may be included in the Work-Sharing unit (as long as they are not determining the direction of the company).

There must be a minimum of 2 employees in a Work-Sharing unit.

Calculation of the benefit rate for high-salary employees

A WS participant will receive a portion of their weekly benefit rate that is equivalent to the portion of work missed due to WS. A WS participant’s benefit rate is determined by the amount of their insurable earnings.  The benefit rate is generally 55% of the client’s insurable earnings to a maximum available rate. If the participant’s insurable earnings per week is $1,042.31 or higher, their benefit rate will be $573 (the maximum benefit rate set for 2020).

For example, if the participant has a weekly insurable earning that is $1,042.31 or higher and usually has a 40-hour work-week, which has now been reduced by 40%, the participant missed 40% (or 16 hours) of their work-week under the WS program and would receive 40% of $573.

To calculate the hourly rate of the benefit and overall benefit to be paid:

Based on this calculation, the participant would receive $229 in WS benefits for that week, for the portion of hours that were not worked and unpaid by the employer.

Employee layoffs

Some employers may have been unable to avoid layoffs prior to applying to participate in WS. Core employees who were laid off prior to the employer applying to enter into a WS agreement may be included in the WS unit. Any employees laid off between the submission of an application to enter into a WS agreement and the date the WS agreement commences will also be eligible to participate.

If the business does not recover as expected and an employee is laid off during or at the end of a Work- Sharing agreement, the employee can apply to transfer their claim to regular benefits. Normally, the benefit rate and the normal duration of the claim are not reduced by Work-Sharing participation, as WS benefits are not regular benefits. WS participation will not have exhausted any of their entitlement to regular or special benefits if only WS benefits were paid.

Note that employee benefits are based on their original Record of Employment (ROE), not on the Work-sharing hours.

Utilization reports for employers with irregular work schedules

Each employee is required to work at least 30 minutes per week to remain eligible for benefits under the program, as indicated on Utilization Reports.

Relief grant payment

A relief grant one-time lump sum payment to employees would be excluded from earning under regulation 35 if the payment is not conditional to providing some sort of service to the employer for the assistance and that the assistance is freely given by the employer, without any legal obligation.

Contact us

For more information on the Work-Sharing program, employers across Canada may call toll-free.

Canada and the United States

Toll-free: 1-800-367-5693 
TTY: 1-855-881-9874

Outside Canada and the United States

Telephone: 506-546-7569 (collect calls accepted)
Hours of operation: 7:00 am to 8:00 pm, Eastern Time, Monday to Friday.

Service Canada has also created an enquiry unit for clients affected by COVID-19 that are seeking information related to the Work-Sharing Program. Enquiries can be sent to the mailbox below for specific Work-Sharing information or to request general information about the Program.

Email: EDSC.DGOP.TP.REP-RES.WS.POB.ESDC@servicecanada.gc.ca
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