This guide will help answer your questions regarding Canada’s Work Sharing Program.
What is Work Sharing?
Work-Sharing is an Employment Insurance (EI) program that helps employers and employees avoid layoffs. The program allows employers to retain skilled employees when there is a temporary decrease in business activity beyond the control of the employer such as COVID-19.
Key Features and Terms of Work Sharing
- WS unit: A Work share unit is a group of employees with similar job duties who have agreed to reduce their hours of work over a specific period of time.
- Equal sharing of work: All members of a WS unit must reduce their hours of work by the same percentage and to share the available work.
- Required work reduction: Work must be reduced by at least 10% to 60%. The reduction of hours can vary from week to week, as long as the average reduction over the course of the agreement is from 10% to 60%.
- Agreement length and extension: A WS agreement has to be at least 6 consecutive weeks long and can last up to 26 consecutive weeks. Employers may be able to extend their agreements up to a total of 76 weeks
What this means for Dealers
- During a Work-Sharing agreement, available work is redistributed through a voluntary reduction in hours worked by all employees within one or more work units. This enables the employer to retain a full work force on a reduced work week rather than laying off part of the work force.
- The streamlined measures undertaken by Service Canada will aim to reduce the processing time to 10 calendar days.
- Work-Sharing application form developed as part of COVID-19 now enables employers to request an initial agreement of up to 76-weeks as well as amendments, all in one form. Before COVID-19, a separate form was in place for employers who wished to request amendments to their existing agreements.
- This option is particularly helpful for companies who don’t meet the 75 percent wage subsidy requirements and 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.
Eligibility: To be eligible for a WS agreement, your business must:
- be a year-round business in Canada for at least 1 year
- be a private business, a publicly held company or a not-for-profit organization
- have at least 2 employees that are normally year-round permanent, full, or part time that are ‘core’ staff for your business
- these employees be eligible and willing to receive EI and agree to a reduction in hours to share any available work
How to Apply:
- Employers are now requested to submit their applications 10 calendar days prior to the requested start date.
- Once the employer has completed the Work Sharing Agreement Form (EMP5100) and Attachment A: Work Sharing Unit Form (EMP5101) they can send in their applications by email on the provincial ids provided by Service Canada.
- Employers can submit one application even if there are multiples work units included, as long as the employer, union representative or employee representative remains the same for all units and their names are added to all Attachment A forms.
Please Note: Email ids can be found in the Appendix section of this document.
Applicability Requirements for Work Sharing are the same as for regular EI benefits:
- Employees participating must have 420 to 700 hours of insurable employment during their qualifying period which is the 52 weeks prior to the start of their EI benefit period
- Each employee in the Work-Sharing unit must experience a reduction of their normal work hours that may be between 10% and 60% over the duration of the agreement (The employee’s work reduction cannot exceed 60%)
- Each employee must work a minimum average of 40% (2 days) of their normal weekly hours over the life of the Work-Sharing agreement, and
- Each employee in the Work-Sharing unit must work at least a minimum of 30 minutes in any given week
Employer Responsibilities: The Employer will be responsible for the following activities within the work-sharing agreement:
- responsible for scheduling hours of work.
- responsible for reporting Work-Sharing hours on a bi-weekly basis.
- reporting any changes to the original agreement, including the addition or deletion of workers, to Service Canada immediately.
Work-Sharing agreements do not affect workers’ entitlement to regular EI Benefits if they happen to be laid off after the agreement ends.
The employer must maintain all existing employee benefits under the work-sharing agreement, for example:
- health/dental insurance
- pension benefits
- group disability
However, employees should be made aware that benefits (including any subsequent payout of benefits) may be reduced if calculated based on earnings or hours of work.
- Service Canada has created an enquiry unit for clients affected by COVID-19 that are seeking information related to the Work-Sharing Program. Enquiries can be sent to the mailbox below for specific Work-Sharing information or to request general information about the Program. Email: DGOP.TP.REP-RES.WS.POB.ESDC@servicecanada.gc.ca
- Weekly requirements for employers/employees are still a requirement under the COVID-19 special measures. The weekly Utilization Report is still required via Data Gateway to ensure the appropriate WS Benefits are calculated and paid. However, if technical difficulties arise with Data Gateway, they can be sent by email based on the provincial email id’s set up.
Eligibility: To be eligible for WS, your employees must:
- be year-round, permanent, full-time, or part-time core staff needed to carry out the day-to-day functions of the business
- be eligible to receive EI benefits
- agree to reduce their normal working hours by the same percentage and to share the available work
Additional Information: Employees who are receiving Employment Insurance regular or special benefits and are called back to work can stop receiving these benefits in order to participate in WS. If not already on the WS agreement, an amendment would have to be done to add employees to an existing agreement and then, they would need to be added to weekly Utilization Reports in order to start receiving WS EI benefits.
Each employee is required to work at least 30 minutes per week to remain eligible for benefits under the program, as indicated on Utilization Reports.
- How are wages to be paid to employees?
- Response: The employer pays the wages to employees for the hours they worked, as per normal. The employer also completes the Utilization Report, so that Employment Insurance (EI) is aware of the work hours that employees missed. The employees are paid directly from EI for the percentage of their benefit rate that corresponds with the percentage of the work hours they missed.
- For example, if the employee missed 50% of their normal weekly hours due to WS, they would receive 50% of their benefit rate from EI. Their benefit rate will not be equivalent to their normal wages, as it is generally 55% of their average weekly earnings to a maximum of $573 per week (for 2020).
- Can work reduction of an employee exceed 60%?
- Response: The employee’s work reduction cannot exceed 60%. Under the Work-Sharing Program, the employer must agree to a reduction in the employees’ regular work schedule ranging between a minimum of 10% and a maximum of 60% on average, over the life of the agreement.
- For example, in a regular 40-hour work week, the projected reduction in hours must be a minimum of 4 hours per week (10%), or a half day, and the projected maximum weekly reduction cannot exceed 3 days per week or 24 hours (60%).
- For non-unionized workplaces who can be the Employee representative?
- Response: In a non-unionized workplace, the employee representative will normally be a member of the Work-Sharing unit and can include:
- Payroll Administrators
- Human Resources Advisors/Administrators
- The employee representative is required to verify Attachment A for accuracy and may play a role in sharing information with the Work-Sharing unit.
- What does this mean for Employers who have conducted layoffs for most of their staff?
- Response: Core employees who were laid off prior to the employer applying into a WS agreement may be included in the WS unit. Any employees laid off between the submission of an application to enter into a WS agreement and the date the WS agreement commences will also be eligible to participate.
- If the business does not recover as expected and an employee is laid off during or at the end of a Work- Sharing agreement, the employee can apply to transfer their claim to regular benefits. Normally, the benefit rate and the normal duration of the claim are not reduced by Work-Sharing participation, as WS benefits are not regular benefits. WS participation will not have exhausted any of their entitlement to regular or special benefits if only WS benefits were paid.
- Note that employee benefits are based on their original Record of Employment (ROE), not on the Work-sharing hours.
- How is the EI benefit rate calculated?
- Response: The EI benefit rate for each employee is established at the start of the Work-Sharing agreement after the submission of a claim. The benefit rate is established in the same manner as the benefit rate for all other EI claims. The Work-Sharing benefit payable in any given week is based on the employee’s loss in normal average weekly earnings. Earnings received from sources other than Work-Sharing need to be reported by each claimant. Employment earnings that are not from the Work-Sharing employer will be deducted from the Work-Sharing benefits payable based on the existing working while on claim provisions.
- How do calculations work if the employee is having other sources of income?
- Response: The EI working while on claim provisions allow claimants to stay connected to the labour market and earn additional income while on claim. The provisions allow claimants to keep receiving a portion of their EI benefits, along with all earnings from employment or other sources.
- Claimants can keep 50 cents of EI benefits for every dollar earned or received while on claim, until their earnings reach 90% of the weekly earnings used to establish their claim. Any earnings above this cap are deducted dollar-for-dollar from benefits. This method is the default rule that automatically applies to all eligible claims.
- Please Note: Specific statutory holidays occurring within a Work-Sharing period are the responsibility of the employer and not compensated by Employment Insurance benefits.
- What are the waiting periods for WS benefits?
- Response: There is no one-week waiting period for Work-Sharing benefits. However, benefits are processed through the EI payment system, meaning it will take a few weeks for the first cheques to arrive. Every two weeks, the employer must verify each claimant’s EI report card after it has been filled out. This EI report card is used to determine the claimant’s bi-weekly entitlement to Work-Sharing benefits.
- Is this a taxable benefit?
- Response: EI Benefits are taxable and are subject to the rules and regulations of the Canada Customs and Revenue Agency Act. In certain cases, for high-income workers, a portion of the EI benefits under Work-Sharing may have to be repaid when the annual income tax return is filed. Additional information on EI taxes can be found in the Appendix section.
- How are wages calculated under the WS agreement?
- Response: The amount of benefits paid for a week of Work-Sharing is calculated by comparing the hours of work missed because of the Work-Sharing agreement against the hours the claimant would have normally worked. Benefits are paid as a percentage of hours missed. For example:
- weekly benefit rate = $500.00
- the normal work week was 40 hours prior to the Work-Sharing agreement, and
- in the week under consideration, the claimant works 30 hours, and misses 10 hours of work due to the Work-Sharing agreement
- In this case, the claimant has worked 30 out of a possible 40 hours. Therefore, 10 out of 40 hours were lost due to the Work-Sharing agreement, or 25%. This claimant will be entitled to 25% of their benefit rate, or $125.00, for the 10 hours missed because of the Work-Sharing agreement.
- Can employees with irregular work hours participate in WS?
- Response: Employees on an irregular work schedule may cycle through a period of rotating shifts comprising longer days or hours of work followed by more hours or days off work, rather than working a conventional work week comprised of five working days with two days off within a calendar week.
- For example, the normal work period may cover a total 21 calendar days, with employees working 15 days followed by 6 days off. The way an employer divides work hours is up to them and can vary from one week to the next. Employees participating in WS can alternate weeks of employment and would be considered having an irregular work schedule; for example, an employee would work 1 week while the other would work the next.
- Once the employer’s irregular work schedule is defined, the employee’s normal weekly hours may be determined based on their normal work schedule pattern over the last year. All employees are required to work at least 30 minutes per week to remain eligible for benefits under the program.
- Normally, a week is counted as a week of unemployment for the purposes of paying WS benefits when an employee has worked at least 30 minutes in a calendar week (Sunday to Saturday). In the case of an irregular work schedule, due to the combination of hours/shifts/days not worked due to an employee’s participation in WS and those dates not worked due to the irregular work schedule, the likelihood exists that there will be calendar weeks in which an employee does not work a minimum of 30 minutes.
- When a WS agreement is approved on the basis of an irregular work schedule, such a week may be counted as a week of unemployment for the purposes of paying WS benefits. However, the manner by which the employer reports hours worked, and hours not worked due to the WS agreement may be modified as an averaging or pro-rating formula. However, employers need to make sure that throughout the life of the agreement, employees who have irregular work schedules have a reduction in working hours between 10-60% (on average).
- How is the benefit rate calculated for high-salaried employees?
- Response: A WS participant will receive a portion of their weekly benefit rate that is equivalent to the portion of work missed due to WS. A WS participant’s benefit rate is determined by the amount of their insurable earnings. The benefit rate is generally 55% of the client’s insurable earnings to a maximum available rate. If the participant’s insurable earnings per week is $1,042.31 or higher, their benefit rate will be $573 (the maximum benefit rate set for 2020).
- For example, if the participant has a weekly insurable earning that is $1,042.31 or higher and usually has a 40-hour work-week, which has now been reduced by 40%, the participant missed 40% (or 16 hours) of their work-week under the WS program and would receive 40% of $573.
- To calculate the hourly rate of the benefit and overall benefit to be paid:
- $573 divided by 40 (NWH) = $14.33 per hour missed
- $14.33 x 16 hours of work missed = $229.28.
- Based on this calculation, the participant would receive $229 in WS benefits for that week, for the portion of hours that were not worked and unpaid by the employer.
EI taxes: https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/repayment.html