Work Sharing Program

What is it?

The Work-Sharing Program is an adjustment program that assists Employers and Employees to avoid layoffs when there is a temporary reduction in business activity due to circumstances beyond the Employer’s control. The program supports Employees, who are eligible for EI benefits, while the Employer recovers.

Sharing the work

The Work-Sharing Program requires that all workers in each class be treated equally. Employers should be cautious about including senior or high-level employees, because it is expected that the workload is going to be shared equally amongst all the members of the sharing unit.

It is however possible to separate the units.

E.g. all the machine workers could form part of a group that shares their work equally, while all the salespersons form another group that shares their work equally amongst themselves.

Eligibility

A. Employers Requirements

To be eligible for the Work-Sharing program, an Employer would need to demonstrate all of the following:

  • be in business in Canada year-round for at least 2 years;
  • be a private business, a publicly held company, or a not-for profit organization
  • a not for profit would need to demonstrate that the shortage of work is directly associated with a reduction in the organizations normal level of Business Activity;
  • be able to demonstrate that the shortage of work is beyond the Employer’s control and not a regular and/or cyclical phenomenon;
  • be able to provide documentation that demonstrates a reduction in regular business activity by at least 10%; and
  • submit and implement a recovery plan detailing how each Work Sharing unit will operate, the reduced hours, and the reasonable expectation that the business will return to normal working hours upon completion of the program.

B. Employee Requirements:

Employees must be eligible to receive Employment Insurance benefits, and be either full-time employees, or be part-time employees who are required to fulfil everyday functions of normal business activity.

The Employee would also need to agree to the Work-Sharing program, and the reduction in hours.

At least 2 employees must work for the Employer before a Work Sharing Agreement can be formed.

Duration

Work Sharing agreements must have a minimum duration of 6 weeks, the maximum duration has recently been extended from 38 weeks to up to 76 weeks.

Workload Must be Reduced

You can’t apply for the Work-Sharing program without cutting the employees hours. The Employees workload must be reduced between 10%-60%. Meaning, the Employee must be working between one half day, to up to 3 days less than they would otherwise have been working during a normal work week.

Further, and as mentioned above, everyone in the class of workers participating in the Work Share program must be treated equally in terms of the percentage of time that they have off.

Employee Benefits

For the duration of the Work-Sharing agreement the Employer is required to maintain all existing Employee benefits, including but not limited to, health insurance, dental coverage, pension benefits, vacation, group disability… However, Employees should be informed that these benefits may be reduced if they are calculated based on their weekly earnings. Additionally, statutory holidays will not be compensated by Employment Insurance benefits if occurring during the Work-Sharing agreement period.

Application

Applications for the Work-Sharing program should be submitted to the Service Canada Program Officer, who will conduct a cost analysis before recommending the program for approval.

The PDF and recovery plan template must be completed and submitted by the Employer on the forms as set out on the government of Canada website.

Other Considerations:

For the duration of the Work-Sharing Agreement, the Employer may not hire new staff, but may replace Employees participating in the Work-Sharing agreement if they choose to leave.

If the Employer has staff that are NOT participating in the Work-Sharing, those departments not participating may increase staff as required.

A. Training

The salary costs of Employees taking part in Training activities during the course of the Work Sharing must be paid entirely by the Employer. Any employees not scheduled to work would have the option of attending.

B. Taxation

EI Benefits received through the Work-Sharing agreement are taxable. However, these are not always withheld at the source, employees receiving these benefits may wish to have their income tax deductions increased in order to avoid paying taxes owing at year end.

C. Bi-weekly Report Cards

Employees can opt-out of the bi-weekly reports that would otherwise be required in order to receive EI Benefits, if they agree to allow their Employer to report their hours worked on the Employee’s behalf.

D. Employer Obligations During the Agreement:

Employer’s participating in the Work-Sharing program must satisfy all of the obligations listed below:

  • provide information to all employees and to each member of the Work Sharing Unit;
  • record and report the total number of hours worked and missed as a result of the Work-Sharing program by way of a Utilization Report (all Employees must work a minimum of one half-hour per week);
  • maintain existing benefits, subject to those which may be reduced if calculated based on weekly earnings;
  • inform Employees who may be affected by the reduced benefits the extent to which those benefits have been temporarily reduced;
  • maintain records of wages/hours and overtime worked for all Employees participating in the Work Sharing program and provide same to Service Canada upon request;
  • report the progress of the recovery plan; and
  • notify the Service Canada prior to any changes to the agreement.

E. Changing the Work-Share Agreement:

Any agreement extensions, layoffs, additions, deletions and substitutions to the Work-sharing units, or shutdowns would require the approval of Service Canada. The form to make changes is available on the Government of Canada website.