Eligibility for past subsidies

You were asked whether an employee is arm’s length or not when you calculated your subsidy amount because the subsidies were calculated differently for eligible non-arm’s-length and arm’s-length employees.

Arm's-length employees

For most small businesses, workers are usually arm’s-length employees unless they are an owner or an owner’s family member.

Non-arm's-length employees

In a small business, a non-arm’s-length employee would most often be:

• a business owner
• a member of an owner’s immediate family (for example, a spouse, parent, child, sibling, grandparent, or grandchild)

It’s possible (but less common) for a non-arm’s-length employee relationship to exist between unrelated people, depending on the circumstances.

If you’re not sure about whether an employee is considered arm’s length or non-arm’s length, or have a business involving more complex control (like a corporation, trust, or partnership), you can read more about specific relationships that are considered non-arm’s length.

Whether an eligible employee was active or on leave with pay was determined one week at a time in the online calculator.

Active employees

Are employees who worked for any part of a week during the claim period.

Employees on leave with pay

Are employees who were temporarily furloughed for one or more full weeks in the claim period but were still receiving pay for those weeks. To be considered on leave with pay for a week within a claim period, an employee must:

• not have worked at all during the full week
• not have been on paid absence (such as vacation leave, sick leave, or a sabbatical)
• have received full or partial pay from you for the week
• have been in an employer-employee relationship with you at the time (they were not terminated)

How active employees and employees on leave with pay were treated in the basic wage subsidy calculation

Employees on leave with pay for one or more weeks in a claim period were not included in the calculation of the wage or hiring subsidy for those weeks under the Canada Recovery Hiring Program (CRHP), Tourism and Hospitality Recovery Program (THRP), or Hardest-Hit Businesses Recovery Program (HHBRP). You may have needed to enter this information into the online calculator for some CEWS claim periods to determine the highest subsidy amount for your situation.

The amount for employees from week to week is determined automatically when you use the online calculator or spreadsheet.

If you participated in Employment and Social Development Canada's Work-Sharing benefit program, you needed to know the amount of EI benefits received by your eligible employees through the program during the claim period, as these benefits reduced your claim amount.

If you don’t have the exact amount of work-sharing benefits received by your employees, we will accept a reasonable estimate.

For all eligible employees, you needed to know how much eligible remuneration you paid them in respect of each week in the period. They must have received their pay before you applied for the subsidy.

If your pay schedule didn’t align with the wage subsidy claim period dates, you had to manually calculate how much you paid the employee in respect of each week. It doesn’t matter whether the employee received their paycheque at the end of the week, at the end of the month, or another time, as long as you used the actual amount they were paid that relates to that week. You could not use an average of daily wages.

If you pay employees weekly or bi-weekly, you could use the downloadable spreadsheet to enter your employees’ pay.

Read more about how to calculate weekly remuneration for different payroll schedules in the CEWS technical questions and answers.

Pre-crisis pay (baseline remuneration) was an average amount of eligible remuneration the employee received in a week during a specific period before March 16, 2020.

This amount was calculated for each individual employee and is not the same thing as calculating the overall CRHP base period remuneration.

There was more than one pre-crisis pay period option you may have used when calculating an employee’s pre-crisis pay for a claim period. The pre-crisis pay period that had the highest weekly average for that employee provided the most potential benefit.

If you hired new eligible employees who did not work for you prior to March 16, 2020, their pre-crisis pay will be $0.

For claim periods 20 and later, you only needed a pre-crisis pay amount for non-arm’s-length employees.

If you want to know more, you can see the details of how the subsidies were calculated.

Find more examples of how to calculate pre-crisis pay (baseline remuneration) in the CEWS technical questions and answers.

Calculate the pre-crisis pay amount

1. Total all the pay (eligible remuneration) paid to the applicable employee during the chosen pre-crisis pay period
2. Divide the total pay by
   • the number of weeks or partial weeks to which the total pay relates^{Footnote 1}, minus any period of 7 or more consecutive days for which the employee was not paid