Canada – Preventing Layoffs – The ‘Work- Share’ Program

Posted by Trish on Oct 29, 2009 in Economy - Job Market |

In the USA, the popularity of furlough programs has increased during the recessionary period, and given the slowdown in business activity, many employees are taking ‘unpaid leave’.

Canada offers its employers the ‘Work-Share’ Program, which at first glance, is an excellent program designed to avoid layoffs, offering instead, a reduced workweek to assist our struggling firms through to recovery.

The Federal Government has implemented this program to the benefit of both the employer and employee; however, contract workers, students, as well as ‘foreign’ workers are not eligible under the program guidelines.

Naturally, since this program is government sponsored, and employees would indeed be collecting ‘Employment Insurance benefits’ for the duration of their participation, there is considerable complexity, and what could be referred to as ‘red tape’ involved in engaging in this process. I have provided the criterion for employers and employees, as well as the Service Canada link below for your reference.

In the 2009 Budget, the ‘Work-Share’ Program was re-evaluated, and an extension was provided for recipients of Employment Insurance benefits from 38 weeks to ‘52 weeks’, providing the ‘applications’ to ‘Service Canada’ were received on or after February 1, 2009.

Employers and employees can still submit applications for this program providing their submission be in prior to April 3, 2010. Applications must be submitted ‘at least one month’ prior to the commencement of the ‘Work –Share’ period, assuming the employer has experienced hardship with respect to sales, or service contracts to justify moving forward. This means that the employer must be able to provide supporting documentation indicating a reduction in sales of at least 10%.

Employers and employees should be aware that the ‘minimum’ duration for benefits in this program is a period of six weeks. In order to qualify, an employer must demonstrate that the employee’s hours will be reduced by 20% to 60% (1-3 days) of regular working hours.

By joining the ‘Work-Share’ program, employers can benefit by retaining qualified employees during slow business periods, and avoid costly hiring expenses. Employees are more likely to participate in an unpaid leave program when there is the security of financial support from Employment Insurance to supplement their income.

Employers should note that they would still be responsible for all existing employee benefits and remuneration for statutory holidays that fall within the ‘Work-Share’ period. In addition, decisions made by Service Canada regarding the assessment of the ‘Work-Share’ application are final with no possibility for appeal if an application is rejected.

In order to qualify for the Work-Share program, an employer must meet the following criteria:

They have been in business in Canada for at least two years (must be consecutive 24 months, seasonal & temporary employers are ineligible)
Prove that the need for reduced hours is unavoidable, temporary, and unexpected
Demonstrate (through a Recovery Plan) how the business will remain viable for the duration of the Work Share period and return to normal working hours as the economy strengthens
Not be undergoing a labour dispute or a work shortage as a result of a labour dispute at a supplier or customer
Have the agreement of the union (if applicable) and employees

For employees to be eligible, they must be: