A Summary of Changes to Canada's COVID-19 Wage Subsidy


A Summary of Changes to Canadas COVID-19 Wage Subsidy

In December 2020, the Canadian Government announced an improvement to the wage subsidy scheme, put in place to help businesses weather the economic restrictions imposed to minimise COVID-19. Here we outline the scheme and summarise recent changes.

Overview of the Canada Emergency Wage Subsidy (CEWS)

First announced in April 2020, the CEWS is intended to help businesses who have experienced a fall in revenue to retain and rehire employees during the coronavirus pandemic.

The CEWS is open to numerous types of employer who have experienced a fall in revenue compared to corresponding periods in 2019. Eligible employers include individuals, corporations, numerous tax-exempt organisations, registered charities, partnerships consisting of eligible employers, and certain prescribed organisations, such as private schools or colleges, registered journalism organisations and registered amateur athletic organisations.

Applicants must also have had a Canada Revenue Agency payroll account on March 15, 2020.

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The Introduction of the CEWS

The CEWS was initially to be in place for a 12-week period, from March 15 to June 6, 2020, with the subsidy applying at a rate of 75% of the first CAD58,700 normally earned by employees, up to a maximum benefit of up to CAD847 per week. Generally, employers had to demonstrate a drop of at least 15% of their qualifying revenue in March 2020 and a 30% reduction for the following months of April and May 2020, when compared to their qualifying revenue for the same period in 2019. However, the scheme has been extended and refined numerous times.

July 2020 changes

A key change came in July 2020, when the CEWS was redesigned so that only employers who saw their revenues fall by 50% received the maximum benefit. These companies received a "base subsidy" of 40% of eligible wages, with the hardest-hit employers receiving a 25% "top-up subsidy". These changes were intended to make the support offered directly proportionate to an employer's experienced decline in revenues, and to taper off the benefits for all companies as the extended deadline of December approached.

Extension to June 2021

The CEWS was further extended in November 2020 until June 2021. The legislation extending the scheme left the base rate subsidy set at 40% and the top-up subsidy at 25%

December 2020 changes


In December 2020, the government announced further changes to the scheme which raised the maximum wage subsidy rate to 75% for the period from December 20, 2020, to March 13, 2021. According to Finance Minister Chrystia Freeland, the increased subsidy is intended to help employers stay afloat through the early months of the year when the trading environment is at its toughest for many businesses.

These measures also permit employers to access the maximum wage subsidy rate based on a single month's revenue decline, rather than the three months' decline previously required.

The subsidy continues to be calculated in four-weekly eligibility periods.

Further changes?


While businesses have the assurance that the subsidy scheme will be in place until at least June 2021, given that the government has tinkered with the CEWS on numerous occasions, further changes affecting the level of subsidy or eligibility requirements cannot be ruled out. It is possible, for example, that the government will announce another alteration to the subsidy rate as March approaches.

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