In this article, we show strategies businesses can take by rearranging work schedules to allow their employees to apply for the Canada Emergency Response Benefit (“CERB”) while running a scaled-down operation.
CERB Eligibility
To qualify for CERB, the worker applying must meet two tests:
First Test
The worker applying must be:
- at least 15 years of age,
- a resident of Canada, and
- for 2019 or in the 12 months preceding the application, earned at least $5,000 in income.
Second Test
In addition to meeting the above test, the worker must:
- have ceased working for reasons related to COVID-19 for at least 14 consecutive days within the four-week period that the application is for, and
- did not receive income in respect of the 14 consecutive days that he or she ceased to work.
In this article, we have assumed that any person who has ceased working did so due to reasons related to COVID-19[1].
Rearrange work to help employees access the CERB
Example
Consider a corporation that only has two full-time employees: Mary and Martha. Recent developments from COVID-19 have reduced the operations of this business such that each employee will start working part-time starting in April. Under this new arrangement, Mary works Mondays and Tuesdays, while Martha works Wednesdays and Thursdays.
Do they Qualify for CERB?
Mary and Martha would not qualify for the CERB support payment. This is because neither of them “ceased working for reasons related to COVID-19” (Test #2). There has to be a full complete stop to working[2].
Even though Mary and Martha had a significant decrease in pay and may need the support payments, the fact that they continue to work prevents them from accessing the CERB. In this case, it seems like the government is taking an all or nothing approach: either you work, or you get the benefit. You can’t get both at the same time.
Musical Chairs: Rearranging Work Arrangements
Fortunately, businesses can restructure their employees’ work arrangements so that their employees can qualify for the CERB. It kind of works like musical chairs.
Suppose the employer rearranges the work, and now asks Mary to work Mondays to Thursdays for the first two weeks of April, and Martha to work Mondays to Thursdays in the last two weeks of April.
In this particular case, both Martha and Mary ceased working for at least 14 consecutive days in April. They would now appear to be eligible for the CERB. A mere rearrangement of the work schedule may provide an additional cash inflow for an owner manager’s workers, while still having the necessary amount of staff around to keep the business going. Most businesses will have more than two employees. Still, the objective is to rearrange the work schedule to rotate workers and allow them a complete cessation of work for at least 14 consecutive days within the 4-week application period.
Business owners can consider rearranging work, put non-essential projects on hold to run a scaled-down operation while keeping employees employed and help them take advantage of the CERB.
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Martin Lee, CPA, CA
Thanusan Raveendran, CPA, CA
Haroon Khan, CPA, CA
Mohammed Al-khooly, CPA, CA
Notes
[1] These could include:
- those who have lost their job, are sick, quarantined, or taking care of someone who is sick with COVID-19
- working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures.
- workers who still have their employment but are not being paid because there is currently not enough work, and their employer has asked them not to come to work.
[2] The term “ceases” is not defined in the legislation, so an ordinary definition of the term may be applied, which would be a full complete stop to working. The term “ceases” does not appear to mean a termination of employment. As long as a worker is not working for 14 consecutive days, whether the worker is terminated or not would not appear to be relevant.
