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Work-Sharing Agreements: preventing layoffs while preserving cash flow

Monday April 13, 2020

Work-Sharing (WS) presents a viable option for many employers to prevent layoffs, while still preserving cash flow, during the COVID-19 crisis.

Work-Sharing is a formal agreement between eligible employers, employees and the federal government. It allows eligible employees to access partial EI benefits through the ‘sharing’ of available work while their employer recovers from a temporary decrease in business activity. This is realized through a reduction in the employee’s normal working hours and corresponding pay.

An example:
You have an employee earning approximately $40,000 per year or $769/week. If you were to lay the employee off, the company would save $769/week and the employee would receive EI benefits equal to 55% of their weekly earnings—approximately $423/week.

BUT, if you utilize a WS agreement to reduce the employee’s weekly work hours by 35%, the employee would still receive approximately $500 in regular weekly earnings plus $148 in EI benefits (55% of the difference between their regular pay and their reduced pay) for a weekly total of $648. Your company retains the skills of an experienced employee while still saving $269/week, and the employee keeps their job and makes $255/week more than the maximum EI benefit available to them.

A WS agreement has to be in place for at least six consecutive weeks and can last up to 26 consecutive weeks, with a temporary option currently in place to extend agreements up to 76 weeks. The reduction of hours can vary from week to week, but the average reduction over the course of an agreement has to be between 10-60%.

If you do not recover as anticipated during the WS program and employees are laid off, the employee can apply to transfer his work-sharing claim to a regular EI benefit claim. The benefit rate and normal duration are not reduced by work sharing.

EMPLOYER eligibility criteria
To be eligible for WS a business must:

  • be in business for at least one year
  • be a private, publicly-held, or non-profit organization
  • have at least two employees in the work-sharing unit*

 *A work-sharing unit is an inclusive group of employees with similar job duties who agree to reduce their hours of work by an equal percentage over a specific period of time.

Note: your business is NOT eligible for WS if your reduction in business activity is due to a labour dispute, a seasonal work shortage, or a decrease in business activity due to a recent increase in workforce size.

EMPLOYEE eligibility criteria:
To be eligible for WS an employee must:

  • be year-round, permanent, full or part-time, and considered necessary to carry out the day-to-day functions of the business
  • be eligible to receive EI benefits (have paid into the EI benefit program and worked the required number of insurable hours in the last 52 weeks)
  • agree to reduce their normal working hours by the same percentage as everyone else within the work-sharing unit and to share available work

Eligibility has also been temporarily extended to employees needed to help generate work and/or are essential to the recovery of the business including:

  • senior management
  • executive-level marketing/sales agents
  • outside sales representatives
  • technical employees engaged in product development

Please note that the following employees are NOT eligible for work-sharing:

  • seasonal employees, or students hired for summer or co-op terms
  • casual, on-call, or temporary staffing agency employees
  • employees responsible for the direction of the company and who hold more than 40% of voting shares in business
  • self-employed

Applying for WS
To qualify for WS, you first require approval from Service Canada. You must apply 10 calendar days prior to the requested start date, and your application must include the following:

The application process is generally straightforward. Additional Information, including details on how to apply, can be found at:

S+C Partners is committed to helping our clients, our staff, and our community during this difficult time and our team is ready to assist you with navigating the challenges posed by this crisis.

Please call us at 905-821-9215 or email us at with any questions.