Canada Emergency Wage Subsidy (CEWS)
Which of your employees qualify
When applying for CEWS, you will need to know which of your employees can be included in your calculation. You will also need to know how much their pay (eligible remuneration) was.
On this page
- Who are eligible employees
- Determining employee pay (eligible remuneration)
Who are eligible employees
An eligible employee is a person who was employed by you (the eligible employer) primarily in Canada throughout the claim period.
For claim periods 1 to 4, you can’t include employees who had 14 or more consecutive unpaid days in the period.
However, for periods 5 and later, you may include these employees in your calculation.
Employee eligibility depends on the person being employed in Canada, not living in Canada.
Retroactively hiring and paying employees
Employees you laid off can become eligible retroactively, as long as you rehire and pay them so they meet the eligibility criteria for the claim period. You must rehire and pay these employees before you include them in your subsidy claim.
Eligible employees and the Canada Emergency Response Benefit (CERB)
People you rehired may have received the Canada Emergency Response Benefit (CERB). Depending on the specific situation, these employees may be required to repay some or all of the CERB they received.
CERB recipients who already know they will need to repay the CERB can find out how to return or repay the benefit.
Arm’s-length and non-arm's-length eligible employees
You will be asked whether an employee is arm’s length or not when you calculate your subsidy amount, because the subsidy is calculated differently for eligible non-arm’s-length and arm’s-length employees.
- Arm's-length employees
For most small businesses, workers are usually arm’s-length employees unless they are an owner or an owner’s family member.
- Non-arm's-length employees
- In a small business, a non-arm’s-length employee would most often be:
- a business owner
- a member of an owner’s immediate family (for example, a spouse, parent, child, sibling, grandparent, or grandchild)
It’s possible (but less common) for a non-arm’s-length employee relationship to exist between unrelated people, depending on the circumstances.
If you’re not sure about whether an employee is considered arm’s length or non-arm’s length, or have a business involving more complex control (like a corporation, trust, or partnership), you can read more about specific relationships that are considered non-arm’s length.
Active employees and employees on leave with pay
Whether an eligible employee is active or on leave with pay is determined one week at a time in the subsidy calculator.
- Active employees
- Are employees who worked for any part of a week during the claim period.
- Employees on leave with pay
- Are employees who were temporarily furloughed for one or more full weeks in the claim period but were still receiving pay for those weeks. To be considered on leave with pay for a week within a claim period, an employee must:
- not have worked at all during the full week
- not have been on paid absence (such as vacation leave, sick leave, or a sabbatical)
- have received full or partial pay from you for the week
- have been in an employer-employee relationship with you at the time (they were not terminated)
For claim periods 5 to 19, employees on leave with pay are treated differently than active employees when calculating your subsidy amount. The amount for employees in either situation from week to week is determined automatically when you use the online calculator or spreadsheet.
For claim periods 20 and 21, pay amounts for employees on leave with pay are not included in the calculation of your basic CEWS amount.
For claim periods 1 to 21, you can claim a 100% refund of the employer-paid part of contributions made for a week on behalf of any eligible employees who are on leave with pay for that full week in the claim period.
A proposed change announced on July 30, 2021, would remove the ability to claim CPP, QPP, EI, and QPIP amounts for employees on leave with pay for claim periods 20 and later.
The employer-paid contributions that can be refunded for employees on leave with pay for the week include:
- Employment Insurance (EI)
- the Quebec Parental Insurance Plan (QPIP)
- the Canada Pension Plan (CPP)
- the Quebec Pension Plan (QPP)
Employees participating in a Work-Sharing benefit program
If you are participating in Employment and Social Development Canada's Work-Sharing benefit program, you will need to know the amount of EI benefits received by your eligible employees through the program during the claim period.
If you don’t have the exact amount of work-sharing benefits received by your employees, we will accept a reasonable estimate.
Determining employee pay (eligible remuneration)
Eligible remuneration is normally the type of employee pay you would make payroll deductions on.
Eligible remuneration includes amounts such as:
- certain taxable benefits
- fees and commissions
Eligible remuneration does not include amounts such as:
- severance pay
- stock option benefits
- tips customers gave directly to the employee
- non-cash taxable benefits, such as the personal use of a corporate vehicle
Claim period pay per week
For all eligible employees, you will need to know how much eligible remuneration you paid them in respect of each week in the claim period. They must have received their pay before you apply for the subsidy.
If your pay schedule doesn’t align with the wage subsidy claim period dates, you will have to manually calculate how much you paid the employee in respect of each week. It doesn’t matter whether the employee receives their paycheque at the end of the week, at the end of the month, or another time, as long as you use the actual amount they were paid that relates to that week. You can’t use an average of daily wages.
If you pay employees weekly or bi-weekly, you can use the calculator spreadsheet to enter your employees’ pay.
Calculate the pre-crisis pay (baseline remuneration)
Pre-crisis pay (baseline remuneration) is an average amount of eligible remuneration the employee received in a week during a specific period before March 15, 2020.
There is more than one pre-crisis pay period option you may use when calculating an employee’s pre-crisis pay for a claim period. To get the most potential benefit, choose the pre-crisis pay period that has the highest weekly average for that employee.
If you have hired new eligible employees who did not work for you prior to March 15, 2020, their pre-crisis pay will be $0.
|Claim period||Pre-crisis pay period options (number of days in period)|
|Periods 1 to 3||
|Periods 5 to 13||
|Periods 14 to 17||
|Periods 18 to 21||
Some of these options were not available when the claim periods first opened for application. If you want to use a different pre-crisis pay period than what was available when you originally calculated your CEWS claim, you can recalculate and change a previous claim you submitted.
For claim periods 1 to 6 you need a pre-crisis pay amount for all employees you’re including in your claims, even if that amount is $0.
For claim periods 7 to 19, you only need a pre-crisis pay amount for any employees who were either:
For claim periods 20 and 21, you only need a pre-crisis pay amount for non-arm’s-length employees.
If you want to know more, you can see the details of how the subsidy is calculated.
Calculate the pre-crisis pay amount
- Total all the remuneration paid to the employee during the chosen pre-crisis pay period
- Divide the total pay by
- the number of weeks or partial weeks to which the total pay relatesFootnote 1, minus any period of 7 or more consecutive days for which the employee was not paid
Example of calculating an employee’s pre-crisis pay amount
ADC Ltd. paid Issa $7200 between January 1 and March 15, 2020, covering a 10-week period.
During those 10 weeks, Issa took 1 week unpaid leave.
Calculation of Issa’s pre-crisis pay amount
- Issa’s total remuneration: $7200
- Total weeks in period: 10 weeks
- Minus: 1 week unpaid leave
Issa’s pre-crisis pay (baseline remuneration) is:
- $7200/9 = $800
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