Summary of the Applicant Guide Work-Sharing Program for Downturn of Business Due to COVID-19

  • Work-Sharing (WS) is an Employment Insurance (EI) program intended to help employers avoid layoffs due to experiencing a temporary downturn in business.
  • Eligible employees who voluntarily agree to reduce their normal working hours and share available work, while their employer has an opportunity to recover, may be eligible for EI benefits.
  • The goal is to return all employees to normal hours by the end of an agreement contemplated by the WS provisions.

 

Temporary Special Measures

  • Effective March 15, 2020 to March 14, 2021, the Federal government introduced the following temporary special measures for employers experiencing a downturn in business due to COVID-19:

 

  • extend the maximum duration of WS agreements from the current 38 weeks to 76 weeks
  • waive the mandatory waiting period between agreements, and
  • ease recovery plan requirements for the duration of the WS agreement

 

  • Note that despite these temporary measures and current circumstances, the Employment and Social Development Canada (ESDC) Application Guide for the Work-Sharing Program for Downturn in Business Due to COVID-19 continues to indicate that applications for work-sharing should be submitted 30 days in advance of the intended start date.

 

It remains to be seen whether this 30 day period will change as the legislation is finalized in response to the current Covid-19 pandemic.

 

Eligibility

  • To be eligible for a work-sharing agreement a business must:
    • be experiencing a recent decline in business activity of at least 10% related to the impact of COVID-19
    • demonstrate the shortage of work is temporary, beyond their control and not cyclical/recurring in nature
    • be a year-round business in Canada for at least 2 years
    • be a private business, publicly held company or not for profit entity
    • have at least 2 employees in the WS Unit, and
    • be willing to implement a recovery plan to support on-going operations and the viability of the business

 

  • Employers are not eligible if their reduction in business activity is due to:
    • a labour dispute
    • a seasonal shortage of work
    • a pre-existing/recurring production slow down, or
    • a recent increase in the size of the workforce

 

  • To be eligible for WS employees must:
    • be a year round, permanent, full time or part time employee, needed to carry out the day-to-day functions of the business (i.e., core staff)
    • be eligible to receive EI benefits according to the general rules of eligibility
    • voluntarily agree to reduce their normal working hours by the same percentage and share available work

 

  • Employees are not eligible if they are:
    • seasonal, casual, on-call or temporary help
    • needed to help generate work or are essential to the recovery of the business (senior management, executive level marketing/sales agents, outside sales representatives, technical employees engaged in product development, etc.)
    • hold more than 40% of the voting shares in the business

 Program Information

  • A WS agreement is composed of WS Units
  • WS Units are groups of at least 2 employees with similar job duties who reduce their hours of work over a specific period of time
  • Supervisors and managers not involved in recovery efforts may be included in WS Units
  • Each unit must authorize an employee-member to represent them in the WS agreement
    • this representative acts as the voice for all employees in the Unit and works with the employer in the WS application process
    • they also ensure employees know what to expect when participating in WS and provide them with a copy of the signed agreement and employee guide
  • ALL employees in the same job description must participate in WS, i.e., a restaurant could not have 1 out of 4 servers decline and continue to work full hours, while having the remaining 3 servers participate in a WS reduction
  • Equal Sharing of work is a requirement – all members of a WS Unit must agree to reduce their hours of work by the same percentage and to share the available work
  • WS Units must reduce their hours by a minimum of 10% (one half day) and to a maximum of 60% (3 days) and the reduction of hours can vary from week to week as long as the average reduction over the life of the agreement is in the 10%-60% range
  • The proposed reduction must match the number of anticipated temporary layoffs, i.e., if seeking a 30% reduction, the business must indicate there is a need to layoff approximately 30% of the workforce (workforce being all employees at a location working in the section of the company affected by the shortage)
  • A WS agreement must be at least 6 consecutive weeks and up to 26 weeks, and as part of the COVID-19 temporary measures may be extended (by request for extension) up to 76 weeks

 

Application Process

  • Employers must provide employees with a copy of the ESDC Employee Guide before applying to the WS program to ensure they are informed of all aspects of the WS agreement
  • A completed application with all 4 documents must be submitted at least 30 days before the requested start date
  • Applications are to be sent by mail
  • When applying for a new agreement, the parties must submit 4 items:

1 –  EMP 5100 – Application for a Work-Sharing Agreement

 

2 –  EMP 5101 – Attachment A: Work-Sharing Unit Attachment  – signed by each employee (for non-union agreements) or by a union representative

  • This lists all employees participating in the WS agreement (all WS Unit members)
  • It must be signed by all named non-union employees and their employee representative
  • For unionized employees only the employee/union representative must sign

 

3 – EMP 5105 – Attachment B: Recovery Plan for Special Measures

  • A recovery plan is a key requirement for the WS agreement and must outline the activities the company will implement to support the ongoing operations and viability of the business
  • There are 4 sections:
    • General Business History – outlining the types of goods produced/services provided, number of years in business, location of head office and other offices, description of business, number of employees and branches, number of union and non-union employees, typical clients, previous WS agreements, if any
    • Measures Taken Before Applying – a description of any measures to respond to the downturn pre-application
    • Measures Taken During WS and Expected Results – a description of the activities the business will take and the expected results.
      • Examples: cross-training employees/skills development; reduce discretionary spending; leveraging existing technology to improve productivity; limiting outsourcing by improving in-house capability; finding new markets/product diversification; improving service to clients
    • Impact of Non-Approval – an overview of the anticipated impact on employees, business, community and/or local labour market if WS is not approved

 

4 – Sales and/or production figures for the last 2 years

  • A record of sales and/or production figures and employment levels for the previous 24 months must be submitted
  • Figures should be broken down by month and include the month prior to the application (i.e., a July 2017 application would include July 2015 to June 2017)

 

A completed application with all 4 documents must be submitted at least 30 days before the requested start date. Applications are reviewed to ensure that all required information is provided, correct and meets program requirements. Service Canada will inform the parties of the status of their application and confirm rejection or approval in writing. All decisions are final and there is no appeal process.  Once an application is approved, Employers should adhere to the ESDC Employer Responsibilities Guide for information on managing the agreement.

Additional Information

Employers cannot increase the size of their workforce during a WS agreement, though they may replace core-employees who choose to leave.

Typically, there is a mandatory waiting period before employers are eligible to begin a new WS agreement for the same employees, but this waiting period has been waived as part of the government’s temporary COVID measures.

Skill enhancement can occur during a WS agreement, but salary costs of employees participating in training during normal scheduled workdays are not compensated through a WS agreement; employees can take part in training during non-workdays/hours.

In the event of a partial or full return to normal business levels, if recovery could be impeded by continued participation in training, employees may be asked to return to work.

All WS agreements are monitored at least once by Service Canada in order to verify and determine the extent to which the WS program objectives are being achieved and the agreement is implemented as agreed to.  Service Canada will contact the employer and employee representative directly and employers may be asked for payroll records.

During the WS agreement the employer must submit a weekly Utilization Report, reporting the total hours worked, hours missed due to participation in WS and hours missed for any other reason, for each member of the WS Unit.

 

The Lancaster Brooks & Welch LLP Labour and Employment department are available for remote meetings to discuss how COVID-19 is impacting your business and will help you naviagate the law as it relates to this situation.

 

This document is provided as a general summary and guide to the Work Sharing Program and we encourage individuals to reach out to their legal counsel for particular advice in response to their circumstances.

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