An Alternative to Layoffs—Federal Work Sharing Program Provides Potential Respite from COVID-19 Wage Crunch

April 07, 2020

Written By Carl Cunningham, Sara Parchello, Archana Ravichandradeva, Aylmer Wang and Katelyn Weller

As an alternative to engaging in layoffs or reducing work-weeks (which we discuss in Employer's Guide to COVID-19—Managing Issues of Pay), an employer may consider applying for relief under the existing Canadian Work Sharing program (some of the requirements of which have been modified during the current COVID-19 pandemic). In light of the prime minister's announcement on March 30, 2020, that the federal Wage Subsidy program is only available to businesses with a revenue decrease of at least 30 percent due to the COVID-19 pandemic, the Work Sharing program may be the most appropriate alternative for businesses that have not seen a 30% reduction in revenues or that do not otherwise qualify for the Wage Subsidy program. For employers that are currently closed under various provincial emergency orders closing non-essential workplaces and services, the Work Sharing program may be a measure that certain businesses can turn to in circumstances where employees are back at work, but the volume of work is not at normal levels.

What is the Work Sharing Program?

• The Work Sharing (WS) program is administered by the Canadian government to help employers and employees avoid temporary layoffs in circumstances where there has been a decrease in normal work levels beyond the control of employers.
• The WS program allows employees to work reduced hours and collect Employment Insurance (EI) while work levels are lower than normal.
• A WS application is made by: (1) the employer; and (2) the employees (or the union in a unionized environment), and submitted to Service Canada.
• If Service Canada approves the application, a WS agreement is entered into between (1) the employer; (2) employees (or the union in a unionized environment); and (3) Service Canada.
• The Canadian government has introduced special WS measures during the COVID-19 pandemic. Those are detailed further below, but include a shortened application process and eligibility for an extended benefit period (e.g., 38 to 76 weeks).

What is the Benefit of Work Sharing?

The WS program provides an alternative to temporary layoffs that may make sense for your business if you are experiencing a general reduction in activity levels/work as opposed to a need to temporarily close or cease operations entirely.

The WS program allows employers undergoing a downturn in their business to retain their employees, even though there is not enough business or revenue to support full work-weeks for employees. Employees would work at reduced hours (e.g., three or four days per week instead of five days per week), but maintain most of their current income levels when the pay for reduced hours from the employer is combined with the benefit payable by Service Canada.

What Are the Minimum Requirements?

Employer Minimum Requirements

• Employer is experiencing a downturn in business activity, directly or indirectly related to COVID-19;
• Employer is a private business, a publicly-held company or a not-for-profit organization that has had year-round business in Canada for at least once year;
• Employer employs at least two employees in the WS unit; and
• Employer agrees to maintain all existing employee benefits (e.g., health/dental insurance, pension benefits, vacation, group disability, etc.) for the duration of the WS agreement, but benefits based on earnings or hours of work may be reduced.

Employee Minimum Requirements

• Employees are "core staff" (i.e., year round permanent full-time or part-time employees who are required to carry out the everyday functions of normal business activity). Employees who are not eligible include seasonal employees, casual or on-call employees and employees essential to the recovery of the business, such as senior management, executive level marketing/sales, outside sales representatives and employees who are at least 40 percent shareholders of the business);
• Employees are eligible to receive EI benefits; and
• Employees voluntary agree to a reduction of their normal working hours between 10 percent to 60 percent, to share available work.

Changes to the Work Sharing Program as a Result of COVID-19 Relief Measures?

• Start Date: A WS application may now request a start date 10 days after the date of the application (previously 30 days).
• Duration: Under normal circumstances, WS agreement must be at least six consecutive weeks long and can last up to 26 consecutive weeks, and may be extended up to 38 weeks; however, this has been increased to 76 weeks if a WS agreement is signed, begins, or ends between March 15, 2020, and March 14, 2021.
• Processing: Service Canada is "aiming" to reduce the processing time of WS applications to 10 calendar days.
• Renewal: Under normal circumstances, employers who have already had a WS agreement are subject to a “cooling-off” period (i.e., number of weeks equal to the duration of the previous agreement) before entering into a new agreement with the same group of employees. This "cooling-off" period has been waived.
• Waiver of "Recovery Plan": Traditionally, WS agreements required the inclusion of a detailed Recovery Plan, which has now been reduced to a single line of text in application form.
• Eligibility: Traditionally, WS agreements were only available for businesses with two years of year-round business in Canada, which has now changed to one year.

How the Work Sharing Program Works

1. An employer and its impacted employees (and union, if applicable) must jointly submit the WS application at least 10 days before the requested start date. The WS application includes a description of the WS units which are usually comprised of employees with similar job duties, such as similar work or a single job description. Any additional work during the WS agreement period must be shared equally amongst all members of the WS unit. Significantly, support for the establishment of a WS unit must be unanimous; individual employees in the same job description cannot volunteer to participate in WS while others continue to work normal hours. (As a result, administratively, it may be easier to negotiate where a union is the representative of all affected employees.)
2. Applications can be sent via e-mail, and there are different e-mails based region or province. You can refer to Service Canada's helpful Work-Sharing Program applicant guide.
3. A Service Canada Program Officer will review the WS application, validate the data provided by the employer and determine if the WS agreement is approved.

What Happens if a Worker Refuses to Sign the Work Sharing Agreement?

A WS agreement will not be accepted by Service Canada if an employee in the proposed WS agreement does not agree (other than a unionized employee whose union has agreed on their behalf).

What Types of Employees Cannot Be Part of a Work Sharing Agreement?

Seasonal employees, co-op and summer students, casual on-call employees, employees hired through temporary help agency cannot form a WS unit.

Employees who are essential to the recovery of the business, such as senior management, executive level marketing and sales professionals, technical employees involved in product development, and employees who hold more than 40 percent of the voting shares of the business also cannot form a WS unit.

How Long Does it Take Service Canada to Process a Work Sharing Application?

Service Canada is "aiming" to process WS applications in 10 calendar days.

Can an Employer Hire Other Employees During a Work Sharing Agreement?

No, businesses cannot increase their workforce during a WS agreement, but may replace WS unit employees if they leave.

When Will a Work Sharing Agreement Be Terminated?

At any time during the WS agreement the employer, the union/employee representative or Service Canada have the right to terminate the WS agreement. Otherwise, the WS agreement will end on the previously determined date. For any extension of the WS agreement or addition/deletion of WS participants, the employer or the union/employee representative and Service Canada all must agree.

What Are the Federal Government Contact Numbers for the Work Sharing Program?

Canada and the United States

• Toll-free: 1-800-367-5693
• TTY: 1-855-881-9874

Outside Canada and the United States

• Telephone: 506-546-7569 (collect calls accepted)

Special Enquiry E-mail

EDSC.DGOP.TP.REP-RES.WS.POB.ESDC@servicecanada.gc.ca

Members of the Bennett Jones Employment Services group are here to assist you through the challenges posed by employment-related business disruptions resulting from the COVID-19 pandemic. In addition, please visit our COVID-19 Resource Centre for other COVID-19-related materials.

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