Federal government’s updated work-sharing program more open to startups amid COVID-19

In light of the COVID-19 pandemic, the federal government has introduced new measures to its existing work-sharing program, an initiative aimed to help businesses avoid layoffs. Under expanded requirements, startups that are at least one year old will now be eligible for the program.

“I believe this is a decent option for companies who don’t meet the 75 percent wage subsidy requirements.”

The changes to the work-share program were made as part of the government’s COVID-19 Economic Response Plan, and will provide employment insurance (EI) benefits to workers who agree to reduce their normal working hours.

The government’s changes are aimed to make the work-share program more useful to eligible businesses

“I believe this is a decent option for companies who don’t meet the 75 percent wage subsidy requirements,” Yves Boudreau, founder and CEO of human resources tech startup Alongside, told BetaKit. “It allows for work to continue and some progress to be made. More importantly it allows for employees to generate a bit more income than they would if they were solely on EI.”

RELATED: Morneau provides more detail on government’s 75 percent wage subsidy for Canadian businesses

The main format of the work-sharing program, which has not changed, comprises an agreement between an employer, employees, and the federal government, that allows Canadian businesses to keep employees under part-time hours when there is a temporary decrease in business activity beyond the control of the employer.

Due to COVID-19, the government has expanded eligibility of the work-sharing program to businesses that have been in operation for only one year rather than two. The government has also eliminated the burden of having to provide sales and production figures.

Through the expanded program, employees can receive EI with no penalties, for hours not paid by the company. The latest work-sharing updates are effective from March 15, 2020 to March 14, 2021.

Prior to the pandemic, a work-sharing agreement was required to last a minimum of six and up to 38 consecutive weeks. Employers can now extend their agreements up to a total of 76 weeks, or about one year and five months.

One requirement that restricted companies from entering into a new work-share agreement right after completing another has been lifted. The mandatory “cooling off” period, as it is called, has been waived for employers who have already used the work-sharing program so that eligible employers can immediately enter into a new agreement.

RELATED: Government expands procurement deals with Canadian startups to aid with COVID-19

The government is requesting employers to submit their applications 10 days prior to their requested start date for the agreement. Prior to COVID-19, employers were requested to send their work sharing application 30 calendar days prior to their requested start date.

According to the government’s work sharing webpage, Service Canada is also hoping to reduce the processing time of applications to 10 days.

Who is eligible

Under the expanded requirements brought on by COVID-19, to be eligible for the program the company must be a year-round business in Canada and must be at least one year old. It also must be either a private business, a publicly held company, or a not-for-profit organization. The previous requirement was limited to companies at least two years old. The change opens up the program to earlier-stage startups.

The business also must have at least two employees in what is called a WS unit, which is a group of employees with similar job responsibilities who agree to reduce their hours of work over a specific period of time. The WS unit is required to reduce its hours of work by 10 to 60 percent.

Employers experiencing reduced business activity due to a labour dispute, a seasonal work shortage, a pre-existing or recurring production slowdown, or a recent increase the size of the workforce, are not eligible for the agreement.

RELATED: CCI tells feds emergency wage subsidy must be expanded to support Canadian tech

Employees who are looking to enter a work-sharing agreement must be year-round, permanent, full-time, or part-time employees that are needed to carry out the day-to-day functions of the business. Employees must also be eligible for EI benefits, and they must agree to reduce their normal working hours by the same percentage and to share the available work.

Seasonal, co-op, and on-call employees are not considered to be eligible for the agreement. Senior management, executive-level marketing or sales agents, external sales representatives, and technical employees engaged in product development are also not eligible. Employees that hold more than 40 percent of the voting shares in the business are also considered to be ineligible.

Boudreau noted that Alongside’s leadership has not decided what avenues the company will explore to help it cope with the economic impact of COVID-19. The CEO pointed to the fact that all government options available are “fully fleshed out.”

“We’re fortunate that we haven’t felt as much of a severe impact to our business, but my co-founder and I are mapping out multiple scenarios to navigate this uncertain future,” he said. “It feels a bit like a ‘choose your own adventure’ book.”

Image source Paul VanDerWerf via Flickr

Isabelle Kirkwood

Isabelle Kirkwood

Writer, globetrotter, drone pilot & David Attenborough enthusiast