Work-Sharing - Eligibility

2. Eligibility

To ensure eligibility for the Work-Sharing program, please review the following criteria on this page before you apply:

Who can apply

Eligible employers

To be eligible for a WS agreement, employers must:

  • Have been in business in Canada year-round for at least two years;
  • Be a private business, a publicly-held company, or a not-for-profit organization;
    • A publicly-held company is a for-profit company whereby its shares/stocks are owned by the general public. Public sector employers, including government or publicly-owned corporations, such as crown corporations, are not eligible for Work-Sharing.
    • For a not-for-profit employer to be eligible, the shortage of work must be directly associated with a reduction in the organizations normal level of business activity. A reduction in revenue levels alone (e.g. grants, donations, memberships, etc) would not meet the Work-Sharing eligibility criteria. Business activity is defined as the selling of goods or services with an objective to earning profit.
  • Demonstrate that the shortage of work is temporary and beyond their control, and is not a cyclical/recurring slowdown;
  • Demonstrate a recent decrease in business activity of approximately 10%; and,
  • Submit and implement a recovery plan designed to return the Work-Sharing unit(s) to normal working hours by the end of the Work-Sharing agreement. There must be a reasonable expectation that recovery (i.e. a return to normal work hours for all participating employees) will be achieved by the end of the agreement.

Note: A franchise will be treated as a stand-alone business.

Eligible employees

Employees being proposed for a Work-Sharing agreement must:

  • be "core employees" (i.e. year round permanent full-time or part-time employees who are required to carry out the everyday functions of normal business activity);
  • be eligible to receive Employment Insurance benefits; and,
  • agree to a reduction of their normal working hours in order to share the available work.

Although members of the Work-Sharing unit must qualify to receive Employment Insurance benefits, eligibility cannot normally be determined until after members have actually filed for benefits. Therefore, all members of a Work-Sharing unit are considered eligible for benefits unless they are told otherwise by an Employment Insurance official. Employees are not required to inform their employer of the status of their eligibility for Employment Insurance benefits.

Temporary (i.e. term or contract) employees are only eligible if they are not employed on a seasonal basis and if they have maintained hours similar to permanent full-time or part-time employees within the last 12 months.

Core employees who were laid off prior to the agreement start date are eligible to participate.

A minimum of two employees is required for a Work-Sharing agreement.

Who cannot apply

Ineligible employers

  • Employers experiencing a reduction in business activity related to a labour dispute.
    • A labour dispute includes work slowdowns, strikes, lockouts and work stoppages. Companies that are experiencing a reduction in business activity attributable to a labour dispute at a component, division, branch, subsidiary, etc., of that same company are also ineligible. As well, a Work-Sharing application cannot be approved where the work reduction is solely attributable to a labour dispute at one of the company's major suppliers or customers.
  • Employers experiencing a reduction in business activity due to a seasonal shortage of work or any other recurring production slowdown; the Work-Sharing program is not intended as a remedy for a pre-existing and on-going condition.
  • The decrease in business activity cannot be directly related to an increase in the employers workforce.
    • For example, a company decides to increase the number of employees from 50 to 100 in September and there is a shortage of work in December whereby there is only enough work for half of the employees. In a case like this, the current employment levels would not support a normal level of business activity. The additional employees hired in September would not be considered core employees and would therefore not be eligible to participate in the Work-Sharing program.

Ineligible employees

  • Seasonal employees and students hired for the summer or for a co-op term.
  • Employees hired on a casual or on-call basis or through a temporary help agency.
  • Employee shareholders, whose shares provide them with significant decision-making power as to the direction of the company.
    • A person who controls more than 40% of the voting shares of a company cannot be employed in insurable employment with that company as per the Employment Insurance Act. Any employee in this position could not qualify for Employment Insurance benefits and, consequently is not eligible to participate in Work-Sharing.

Work-Sharing unit

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.

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 (i.e. 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 (e.g. senior management, executive level marketing/sales agents, outside sales representatives, technical employees engaged in product development, etc.). 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 two employees in a Work-Sharing unit.

Equal sharing of work

All members of a Work-Sharing unit must agree to reduce their normal work hours and to share the available work. If, during the period of the Work-Sharing agreement, work activity increases, the additional hours of work must be shared equally among all members of the unit. For example, a group of machine operators and a group of shipper/receivers can only form part of the same Work-Sharing unit if both groups share the available work and reduce their hours equally (i.e. same percentage reduction). Generally speaking, it is easier to ensure an equal reduction of work for employees that perform different job duties if they are divided into separate units.

Individual employees in the same job description cannot volunteer to participate in Work-Sharing while others decline to participate and continue to work normal hours. Members of a Work-Sharing unit who do not qualify for or who (for personal reasons) choose not to accept Employment Insurance benefits are still required to reduce their hours of work on an equivalent basis.

In the context of a unionized work environment, there must be an equal reduction of hours and sharing of all available work among members of a Work-Sharing unit regardless of any seniority clauses in a collective agreement.

Employee/Union representative

The members of each Work-Sharing unit must authorize an employee who will represent them in the agreement. Normally, the employee representative will be a member of the Work-Sharing unit. In a unionized workplace the authorized employee representative may be a member of, and designated by the union. This individual will normally be referred to as the union representative. The employee/union representative acts as the delegate and voice for all employees in a Work-Sharing unit. The employee representative works with the employer in the Work-Sharing application process and is responsible for communicating the needs and relaying any issues or concerns of the Work-Sharing participants to the employer. As well, the employee representative will ensure that the employees know what to expect when participating in a Work-Sharing agreement and provide them with a copy of the signed agreement and the Employee Annex. The employee representative must agree to what is stipulated in the Work-Sharing application and the Work-Sharing agreement by signing both documents.

Shortage of work

To be eligible for the Work-Sharing program, there must be a recent decrease of approximately 10% (or more) of a company's business activity. In other words, employers must demonstrate a decrease of approximately 10% in sales or production levels within the last six months.

Employers must provide a record of their sales or production figures (as well as the total number of employees) over the last 24 months up to and including the last month prior to submitting the application, broken down by month as part of their completed application form (box 29 of the application form).

For example, an application submitted in June 2011 must include sales/production and employment level figures from June 2009 to May 2011, inclusive. Note: Following receipt of the Work-Sharing application, Service Canada may request figures for future months as well.

Expected work reduction

Work-Sharing agreements must include a reduction in work activity of the employees' regular work schedule between a minimum of 10% (one half day) and a maximum of 60% (three days). In any given week, the work reduction can vary depending on available work, as long as the work reduction on average over the life of the agreement is between 10% and 60%.

The proposed reduction in work hours should correspond with the number of anticipated temporary layoffs (identified in Box 37 of the application form). For example, if an employer submits a request for a 40% reduction in the hours of work, the employer must indicate there is a need to layoff approximately 40% of the workforce. Workforce is defined as all employees working at the location of the business (Box 19 of the application form) and who are working in the section(s) of the company affected by the shortage of work.

Agreement duration and extension

Work-Sharing agreements must have a minimum duration of 6 weeks. The maximum initial agreement duration is 26 weeks with a possible extension of up to 12 weeks.

Extensions are not automatic; all requests for an extension must be assessed and approved by Service Canada. Employers must submit an extension request form (EMP 5103) at least 30 days prior to the end date of their Work-Sharing agreement. The request for an extension must provide reasons why recovery was not achieved and must demonstrate a continued reduction in business activity that would result in the layoff of one or more employees. The employer must provide an updated recovery plan outlining progress to date with a list of activities that will take place during the extension period that will lead to normal working hours by the end of the agreement.

Employee benefits

The employer must maintain all existing employee benefits (e.g. health/dental insurance, pension benefits, vacation, group disability, etc.) for the duration of the Work-Sharing agreement. 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. Also, any statutory holidays occurring within a Work-Sharing period are not compensated by Employment Insurance benefits and are the responsibility of the employer.

Workforce

Businesses are not allowed to increase their workforce during a Work-Sharing agreement, but may replace core-employees who choose to leave. Note: For businesses with multiple departments, the departments that are not participating in Work-Sharing (i.e. no employees form part of a Work-Sharing unit) may increase staff as required.

Training activities

Employer initiated training activities, whether on-the-job training or off-site courses, may take place during the period of the Work-Sharing agreement. The salary costs of employees taking part in training activities during normal scheduled working hours/days cannot be compensated by Service Canada. Training could take place during the non-working days/hours for which the employees are in receipt of Work-Sharing Employment Insurance benefits; however, attendance would be optional.

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