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COVID-19 wage and hiring support for businesses

Which of your employees qualify

When applying for a wage or hiring subsidy, 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.

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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.

Employee eligibility depends on the person being employed in Canada, not living in Canada.

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 subsidies are 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 online 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)

How active employees and employees on leave with pay are treated in the basic wage subsidy calculation

Employees on leave with pay per claim period
Claim period Inclusion of employees on leave with pay
Periods 20 and later Not included in the calculation of the basic subsidy amount.
Periods 5 to 19
Both active employees and employees on leave with pay were included in your calculation. You may also have recieved a refund of contributions you made for them.

Employees on leave with pay for one or more weeks in a claim period are not included in the calculation of the wage or hiring subsidy for those weeks under the Canada Recovery Hiring Program (CRHP), Tourism and Hospitality Recovery Program (THRP), or Hardest-Hit Businesses Recovery Program (HHBRP). In the past, you may have needed to enter this information into the online calculator for some CEWS claim periods to determine the highest subsidy amount for your situation.

The amount for employees from week to week is determined automatically when you use the online calculator or spreadsheet.

Refund of employer-paid contributions for employees on leave with pay (no longer applicable)

For CEWS claims for periods 1 to 19 only, you could claim a 100% refund of the employer-paid part of contributions made for a week on behalf of any eligible employees who were on leave with pay for that full week in the claim period.

The employer-paid contributions that could be refunded for employees on leave with pay for the week included:

  • Employment Insurance (EI)
  • the Quebec Parental Insurance Plan (QPIP)
  • the Canada Pension Plan (CPP)
  • the Quebec Pension Plan (QPP)

Read the in-depth information about how the wage subsidy was calculated for employees on leave with pay in the CEWS technical questions and answers.

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, as these benefits will reduce your claim amount.

If you don’t have the exact amount of work-sharing benefits received by your employees, we will accept a reasonable estimate.

Incremental and base period pay for the CRHP

The CRHP is calculated using how much your overall pay (eligible remuneration) to your employees has increased from the time of the base period of March 14 to April 10, 2021, to the time of the claim period. The base period dates are the same as CEWS claim period 14.

This change in overall pay is referred to as your incremental remuneration. To calculate this amount, you will need to know:

  • which of your employees were eligible and actively working in the claim period
  • which of your employees were eligible and actively working in the base period
  • how much your pay was for your active eligible employees

This means there are three time periods for which you will need to know the pay amounts for your active eligible employees to calculate the CRHP:

  • each week of the 4-week claim period you are applying for
  • each week of the 4-week base period (March 14 to April 10, 2021)
  • for non-arm's length employees, the average weekly amount for the pre-crisis pay period

You can use the online calculator to determine this amount. You only need to find your total number of employees and their eligible pay for the base period (March 14 to April 10, 2021) one time. This is a one time calculation. The base period does not change from one claim period to the next.

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:

  • salary
  • wages
  • certain taxable benefits
  • fees and commissions

Eligible remuneration does not include amounts such as:

  • severance pay
  • stock option benefits
  • dividends
  • tips customers gave directly to the employee
  • non-cash taxable benefits, such as the personal use of a corporate vehicle

Read more about specific items included in eligible remuneration for these subsidies in the CEWS technical questions and answers.

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 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 downloadable spreadsheet to enter your employees’ pay.

Read more about how to calculate weekly remuneration for different payroll schedules in the CEWS technical questions and answers.

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 16, 2020.

This amount is calculated for each individual employee and is not the same thing as calculating the overall CRHP base period remuneration.

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 16, 2020, their pre-crisis pay will be $0.

Pre-crisis pay period options per claim period
Claim period Pre-crisis pay period options (number of days in period)
Periods 18 and later
  • January 1 to March 15, 2020 (75 days)
  • July 1 to December 31, 2019 (184 days)
  • if the employee was on certain kinds of long-term leave from July 1, 2019, to March 15, 2020, the 90-day period ending before the leave started

For claim periods 20 and later, 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 subsidies are calculated.

Find earlier pre-crisis pay period options for the CEWS and more examples of how to calculate pre-crisis pay (baseline remuneration) in the CEWS technical questions and answers.

Calculate the pre-crisis pay amount

  1. Total all the pay (eligible remuneration) paid to the applicable employee during the chosen pre-crisis pay period
  2. 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 pay: $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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