You will be asked whether an employee is arm’s length or not when you calculate your subsidy amount, because the subsidies are 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 is active or on leave with pay is 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 are treated in the basic wage subsidy calculation

Employees on leave with pay for one or more weeks in a claim period are 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). In the past, 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.

Refund of employer-paid contributions for employees on leave with pay (no longer applicable)

If you are participating in Employment and Social Development Canada's Work-Sharing benefit program, you will need to know the amount of EI benefits received by your eligible employees through the program during the claim period, as these benefits will reduce 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 will need 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 apply for the subsidy.

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

If you pay employees weekly or bi-weekly, you can 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) is an average amount of eligible remuneration the employee received in a week during a specific period before March 16, 2020.

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

There is more than one pre-crisis pay period option you may use when calculating an employee’s pre-crisis pay for a claim period. To get the most potential benefit, choose the pre-crisis pay period that has the highest weekly average for that employee.

If you have 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 need 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 are calculated.

Find earlier pre-crisis pay period options for the CEWS and 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