Updated: April 8, 2020 at 8:00 AM
Q: I understand nonprofits are eligible to apply for the 75% federal wage subsidy. Is that right?
A: Yes, all organizations and businesses that can demonstrate a loss of 30% or
more revenue directly resulting from COVID-19 are eligible to apply for the federal wage subsidy program, including not-for-profits and charity organizations.
Q: With regards to the 75% wage subsidy program, can my employees still work? Can employees continue to earn 100% of their regular working wages?
A: Yes, in fact the underlying purpose of this program is to keep employees working in their regular jobs, at their regular rate of pay. The 75% is intended as a subsidy for the employer to recoup 75% of the cost of wages, not a wage replacement for the employee.
Examples of 75% wage subsidy applied:
Weekly Rate of Pay
75% subsidy 25% employer-paid
$481.88 $361.41 $120.47 Employee B
$937.50 $703.12 $234.38
$1129.25 $847.00 max
$1237.50 $847.00 max
$390.50 (employer pays remaining wage which is more than 25% of this salary)
Employers are asked to pay 100% of the normal wages to their employees and the employer will receive a subsidy equivalent of up to 75% of that, up to a maximum subsidy of $847.00/wk or $10,164 per employee during the 12 week period (March 15 to June 6, 2020).
Q: Is there more clarity on a loss of 30% of funds? Moving out from this we will have a number of fundraising events – our own and third-party ones – that will not happen or will be greatly affected by dollars people will be able to give.
A: As of right now, the full details haven’t been announced. What we do know, however, is that employers are to compare the same “month” in 2019 to 2020 to see if there is a 30% drop in revenue (there are some other restrictions a well).
So, for example, tourism employers wanting to apply for funds now will likely be rejected because they have not yet lost expected revenue. My understanding is that the loss is based on a go-forward basis, from March 15, 2020.
Q: If they are eligible for EI, do I HAVE to lay them off? I prefer the 75% wage subsidy option for them.
A: No, you do not have to lay off employees. This decision is in the employer’s hands.
- If you have work for employees, even if they are not as productive as they might normally be, keep them employed. Not only will employees get to keep their regular rate of pay, you will get to continue to employ them at their regular work hours and it is much simpler for benefits continuance, and they will continue to be engaged with the organization. You, the employer, can apply for the 75% wage subsidy to offset your costs of employing them full time. Employees don’t need to apply for anything.
- If you don’t have enough work to keep all your employees employed, you may choose to do layoffs. (Consider employee compensation beyond base wages that would be impacted by a layoff.) Then the employee would apply for EI benefits (which equate to approximately 55% of their regular earnings or a weekly maximum $573).
You may also want to review and apply to the workshare program. The 75% wage subsidy may be an interim fix, whereas the workshare program is available for a much longer period of time, potentially.
Q: If nonprofits or others use the program, what will be the cost to them be after this is all over?
A: Unfortunately, we don’t yet know what will happen going forward. Something to keep in mind is that the 75% wage subsidy is a taxable benefit and counts as income so people & employers should consider setting aside a portion of any funding they receive now so that they limit the impact of any monies that to pay taxes later. In general, if you are getting any emergency funding, setting aside as much as you can now will help you pay back what you might end up owing when things go back to normal and recipients of funding will be inspected, which I would anticipate. Create a separate bank account for that money so it doesn’t feel like it is your own, just in case.
Q: For nonprofits that have a contingency fund (we do and it is healthy but depending on the market we may lose a fair bit for a small nonprofit to cash it in) do we have to use that before becoming eligible for any aid?
A: The programs that the government has made available are to limit the immediate negative financial impacts to people and organizations. It is for current or future anticipated losses related to the pandemic.
While it hasn’t been determined yet, I anticipate that there won’t be an expectation that organizations will deplete their savings. If the money saved is a reserved fund, there are specific requirements around how they are to be used and you’ll need to comply with those requirements first and foremost.
Q: Before accessing aid, do employers have to pay out vacation time accrued?
A: If you opt to keep employees employed, and apply for the 75% wage subsidy, employees continue their regular employment, including any vacation accrual, other benefits, etc. You are not obligated to do any payouts before applying/accessing any of the aid programs. Note that the 75% subsidy program has not yet been passed in legislation so applications are not being accepted, nor are all the details worked out just yet. The 10% subsidy is currently available and open for applications.
Q: If I lay off an employee, do I have to deplete their vacation bank?
A: No, not if you are laying them off. The intent of a layoff is to temporarily suspend the work of the employee and ideally you will return them to work once the pandemic ends. Terminations for cause or without cause, however, do require vacation to be paid out because there is no expectation of a return to employment.
Q: What might be a direction re accumulating sick time, vacation time while working from home?
A: Consider your working from home employees as simply working in a new work location (home). The same employment terms apply, and they continue to accumulate sick, vacation, etc. while working from home. They may also need to take a sick day if they are not feeling well. They won’t be contagious to other coworkers/clients; however, employees still need to be cognitively productive. It is best to be clear about your expectations for employees working from home.
Q: Should we do new letters of offer/terms of employment if we can make temporary changes to their employment or employment conditions?
A: I’m recommending written memos to employees rather than changing policies or terms of employment. The current situation is an exceptional one that is temporary. Instead of making a policy that will be difficult to undo after the pandemic, make it clear that this is temporary. If after the pandemic you want to allow more working from home, create a policy then when you can think about it without feeling pressured. Better yet, make a policy that states that working from home will be determined on a case-by-case basis and will depend on the position, operational requirements, productivity expectations, accessibility expectations, and also mention that the privilege can be revoked by management.
Disclaimer: The answers to these frequently asked questions are based on current understandings of policies and programs as they are presented to the media and the general public. resolveHR is not responsible for program changes or policy interpretations that may be different then as explained below, nor does resolveHR provide advice that is legal in nature. We will make every effort to continue to update the information as it is available.
- Vicki Bryanton Practical Solutions
- Ashlee London
- Wendy MacIntyre