Given the recent downturn in the economy, many employers are searching for creative ways to avoid layoffs and terminations where there has been a reduction in the level of their business activity. Service Canada's Work-Sharing Program is an example of a tool which can assist employers weather the economic storm. The Program provides income support to workers eligible for Employment Insurance (EI) benefits who are willing to work a temporarily reduced work week.
An employer who can demonstrate a decrease in sales or orders of at least 10% and is prepared to reduce its employees' regular work schedules by 20% to 60% is eligible to apply for the Program.
The following is a summary of important information employers will need to know about the Program if they wish to participate.
HOW THE PROGRAM WORKS
The Program is an agreement between an employer, its employees and Service Canada. Employee participation in the Program is purely voluntary and employees who agree to take part must sign a declaration on the Program application form. Employee participants form a "work-sharing unit".
Not all employees at an employer's workplace will necessarily be included in the "work-sharing unit" since some employees will be required to assist in the recovery of the business by generating work. Consent from employees who are not included in the "work-sharing unit" is not required.
Once an employer has obtained consent from affected employees, it must complete the Service Canada application form which requires, among other things, that the employer submit a recovery plan that demonstrates that the business can be maintained during the period of the agreement.
WHO IS ELIGIBLE TO PARTICIPATE IN THE PROGRAM
To be eligible for a Program agreement, an employer must:
- have been in year-round business in Canada for at least 2 years;
- show that the need to reduce working hours is unavoidable;
- show that the work shortage is temporary and unexpected (i.e., not due to a seasonal slow-down);
- demonstrate (through a recovery plan) how the business will be maintained for the duration of the agreement and return to normal working hours as the economy strengthens;
- not be undergoing a labour dispute; and
- have the agreement of the union (if applicable) and employees.
To be eligible for a Program agreement, employees must:
- be "core staff";
- meet the same eligibility requirements as for regular EI benefits; and
- not be participating in a labour dispute.
Employees who were laid off prior to the employer's application to the Program are still eligible for inclusion in the "work-sharing unit", provided the workers are deemed by the employer to be essential to the maintenance of the business for the duration of the Program agreement.
The minimum duration of a Program agreement is six weeks. As of February 1, 2009, the maximum Program agreement duration is 52 weeks. This new maximum is one of the provisions included in Budget 2009, and will be in effect until April 3, 2010.
EMPLOYER RESPONSIBILITIES DURING THE PROGRAM AGREEMENT Employers must:
- maintain all existing employee benefits for the duration of the Program agreement;
- not increase their workforce, but may replace essential employees who choose to leave.
PROGRAM APPLICATION PROCESS
Applications must be submitted at least one month prior to the anticipated start date. If a business has more than one location, a separate application must be completed for each business registration number. A separate application is required for each province.
ADVANTAGES OF PARTICIPATING IN THE PROGRAM
The Program is a creative tool that enables employers to avoid terminations and temporary layoffs during these difficult economic times by temporarily reducing employees' work hours. The program benefits both employers and their employees. Employers benefit by retaining staff and avoiding the expenses of hiring and training new staff once business levels return to normal. Employees benefit by retaining their skills and jobs while receiving EI benefits for the days that they are not working.