This post was prepared with the assistance of summer law student Caileigh Rendek.
Beginning June 6, 2021, eligible employers may access the Canada Recovery Hiring Program to subsidize the additional labour costs associated with hiring new workers or bringing back employees who were previously laid off, increasing workers’ hours, or increasing wages.
Canada Recovery Hiring Program: Eligible Employers with 2021 Revenue Decreases
On June 2, 2021, the Honourable Chrystia Freeland (Deputy Prime Minister and Minister of Finance) and the Honourable Mary Ng (Minister of Small Business, Export Promotion and International Trade) announced that the new Canada Recovery Hiring Program (CRHP) would be available retroactively to June 6, 2021 once Bill C-30, the federal budget legislation, receives Royal Assent.
As announced in the federal budget, the CRHP will offset a portion of the extra labour costs of qualifying employers as they increase their business activities throughout the summer and fall of 2021. The program will apply to eligible remuneration paid from June 6, 2021 to November 20, 2021. The eligibility requirements and the application process for the CRHP are similar to the Canada Emergency Wage Subsidy (CEWS).
Key Considerations for Employers
The CRHP is intended to primarily benefit privately-owned Canadian employers, as corporate employers must be a “Canadian-controlled private corporation” in order to qualify (this requirement excludes publicly-listed and foreign-controlled corporations). Employers must also choose between either the CRHP or the CEWS for a particular claim period. Eligible employers should consider which of these programs would provide a greater benefit in their circumstances.
Employers who are eligible for the CEWS are generally eligible for the CRHP. Eligible employers include:
- taxable Canadian-controlled private corporations (including co-operative corporations that are eligible for the small business deduction) and trusts;
- registered charities;
- non-profit organizations; and
- partnerships, provided that at least 50% of the fair market value (“FMV”) of all interests in the partnership are held by partners that would otherwise be eligible for the subsidy.
As with the CEWS, employers must have had a payroll account open with the Canada Revenue Agency (CRA) on March 15, 2020 in order to qualify for the CRHP.
Eligible employers must also experience a decline in revenues to qualify for the CRHP. For the period of June 6 to July 3, 2021, any revenue reduction is sufficient; for the remaining program periods (July 4 to November 20, 2021), the employer’s revenues must have declined by more than 10% in order to qualify for the CRHP. The employer’s revenue reduction is determined in the same manner as under the CEWS. Whatever approach the employer chose in calculating revenues for CEWS purposes must be used for the CRHP as well.
Eligible employees must be employed in Canada by an eligible employer throughout a qualifying period. The CRHP is not available for employees on leave with pay/furlough, other than those who are on a traditional paid absence (e.g. vacation leave, sick leave, sabbatical).
Employers will calculate their subsidy amount by comparing their base period remuneration paid from March 14 to April 10, 2021 with the eligible remuneration paid in the particular CRHP claim period. The incremental increase in remuneration is then multiplied by the subsidy rate for the qualifying period to determine the subsidy amount.
Eligible remuneration for the CRHP includes salary, wages, and other remuneration (e.g. taxable benefits) where the employer is required to withhold or deduct amounts in respect of the employee’s income tax obligations. The maximum eligible remuneration is $1,129 per week per employee. Eligible remuneration for a non-arm’s length employee for a week cannot exceed the employee’s “baseline remuneration” for that week (as calculated for CEWS purposes).
The subsidy rate for each qualifying period is outlined in the table below:
|Qualifying Periods||June 6, 2021 to July 3, 2021
|July 4, 2021 to July 31, 2021||August 1, 2021 to August 28, 2021||August 29, 2021 to September 25, 2021||September 26 2021 to October 23, 2021||October 24, 2021 to November 20, 2021|
|Hiring Subsidy Rate||50%||50%||50%||40%||30%||20%|
To illustrate, if an employer’s eligible base period remuneration for March 14 to April 10, 2021 was $25,000, and its eligible remuneration for June 6 to July 3, 2021 increased to $40,000, the employer could claim the CRHP in respect of the $15,000 increase in eligible remuneration. Because the CRHP rate for June 6 to July 3, 2021 is 50%, the employer would qualify for a CRHP subsidy of $7,500.
Eligible employers have the option of claiming either the CEWS or the CRHP. To determine which subsidy to claim, employers should compare the benefit amounts available under each program. Employers must submit CRHP applications no later than 180 days after the end of the qualifying period.
As you evaluate your employee compensation policies during these challenging times, you should consider the subsidies that may be available to your organization. In making these decisions, MLT Aikins LLP would be pleased to assist with determining whether your business structure is eligible for this emergency relief program.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.