A Work-Sharing Agreement can help both businesses and employees avoid layoffs in the following situations:
- There is a temporary drop in typical commercial activity beyond the employer’s control.
- Employees qualify for Employment Insurance benefits who work a temporarily reduced work week while their employer recovers benefit from the agreement.
Employers, employees, and Service Canada are all parties to a Work-Sharing Agreement. Employees that are part of a Work-Sharing agreement must agree to the following:
- a restricted work schedules
- sharing the work that is available over a set amount of time
A Work-Sharing agreement must be agreed to by the company, the employees concerned (and, if relevant, the union). The employer then applies to be a part of a Work-Sharing agreement.
Who Is Eligible?
Your company must meet the following criteria to be considered for a Work-Sharing agreement:
- have a year-round business in Canada for at least one year,
- have a year-round business in Canada for at least one year,
- have at least two employees in the Work-Sharing unit.
Work-Sharing eligibility was expanded during COVID-19 to include:
Employers such as government business enterprises, often known as public firms and not-for-profit organizations, are experiencing a labor shortage. COVID-19 has caused a reduction in business activity and revenue levels, resulting in a shortage.
Your company is not eligible for Work-Sharing if it is experiencing a drop in commercial activity as a result of the following:
- a labor dispute,
- a seasonal labor shortage,
- a drop-in business activity caused by a recent increase in the workforce’s size
If an employer is one of the following, they are ineligible:
- an employer that exists to carry out the management of a government program or activity. Municipalities or self-employed Government Agencies are examples of programs/activities wholly government in origin.
Your employees must meet the following criteria to be eligible for Work-Sharing Employment Benefits:
- Year-round, permanent, full-time, or part-time employees are required to carry out the business’s day-to-day operations (your “core staff”)
- be eligible for EI benefits*, and agree to reduce their typical working hours by the same percentage and split available work
Before joining in Work-Sharing, some firms may have been unable to prevent layoffs. The Work-Sharing unit may comprise core employees laid off before the firm applied for a Work-Sharing agreement. Employees laid off between the time an application for a Work-Sharing agreement is submitted, and the start date of the Work-Sharing agreement are also entitled to participate.
The following employees are not eligible for Work-Sharing:
employees hired for the summer or a co-op period employees hired on a casual or on-call basis, or through a temporary help agency personnel in charge of the firm’s direction and who own more than 40% of the voting shares in the company, or self-employed
What Do you Need before you Apply?
All parties are involved in roles and responsibilities.
- Employer: The employer must appoint a representative who has signing authority over the company. By completing form EMP5100, the employer requests a Work-Sharing Agreement, and all representatives or other parties will be required to sign the application and agreement by the employer.
- Representative of the employer: The individual appointed as an employer representative must have the employer’s permission. This person must be authorized to report to the Canada Revenue Agency on behalf of the company (CRA). Due to their responsibilities under the agreement, this person cannot be a member of the Work-Sharing unit.
- Employee representative/union representative: Typically, the employee representative will be a Work-Sharing unit member. Additional freedom is allowed for employee representatives who are not members of the Work-Sharing unit under COVID-19 special measures. Individuals who can represent employees and validate the accuracy of the Work-Sharing Unit include Payroll Officers, Human Resources Advisors/Administrators, and Managers. Employee representatives can be selected by an individual who is allowed to report for the company by the Canada Revenue Agency and attest to the participation of all employees mentioned in Attachment A for the Work-Sharing Unit. The approved employee representative in a unionized workplace may be a union member appointed by the union.
How to Apply?
Employers must complete and sign both of these papers to apply:
Before you start filling out the forms, make sure you’ve read and comprehended the following:
- the eligibility requirements, and
- Overview of a work-sharing agreement If your agreement ends or is signed between March 15, 2020, and September 25, 2022, special precautions for COVID-19 (2019 new coronavirus) will be taken.
Submission of Forms
Employers must submit the completed documents, including the Work-Sharing application form (EMP5100) and Work-Sharing unit Attachment A form (EMP5101), at least ten business days before the planned start date.
To make the form function (including digital signatures), save it to your computer and then reopen it with a PDF reader like Adobe Reader or Foxit Reader to fill in the blanks. Then, after you’re finished, resave it. Employers can send completed forms to their Regional Work-Sharing Unit through email, and the application will be acknowledged in writing by Service Canada.
Signing the Agreement
All parties concerned (employer, employer representative, union, and employee representative(s)) testify to the following by signing the agreement:
- according to the Work-Sharing Agreement’s conditions. They agree that all information provided by the employer, the union(s), or employee representative(s) in the application will be treated as confidential following applicable legislation and used solely to determine eligibility under the Work-Sharing Program of the project described in the application, as well as to support research and statistics gathering activities.
- The company, the union(s), or the employee representative(s) submit a Work-Sharing project to the Commission for approval. Following the Employment Insurance Act’s Section 24 and the Employment Insurance Regulations’ Sections 42 to 49.
- They are aware that intentionally providing incorrect or misleading information to get into a Work-Sharing agreement may result in fines under the Employment Insurance Act.
What Happens after you Apply?
The application will be acknowledged in writing by Service Canada. An email will be sent to you from a Program Officer informing you of the status of your application. All decisions will be confirmed in writing, whether granted or rejected. A cost study will be carried out by the Program Officer (comparing the cost related to the temporary layoffs and the cost of the proposed Work-Sharing agreement). It determines the cost difference/effectiveness of suggesting a Work-Sharing application versus not suggesting one. The Program Officer will also consider a social/community impact evaluation to identify the overall impact of the business on the community.
Tax Deductions for Work-Sharing Benefits
Employment Insurance Work-related Tax Deductions Benefits are shared based on the information provided by the claimant. The information is provided in the Employment Insurance application’s Income Tax section. The amount of tax deducted depends on the province, personal tax situation, and the claimant’s benefit rate. Participants in Work-Sharing are taxed on their Employment Insurance benefits. Taxes are not usually deducted at the source because of the weekly amount of benefits paid. Participants may want their tax deductions to be raised. To prevent paying a substantial amount of income tax at the end of the year.
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