Applicant Guide
C. Eligibility Criteria
i. Eligible Employers
To be eligible for a Work-Sharing agreement, employers must:
- be a publicly-held company, a private business or a not-for-profit organization Footnote 4;
- have been in year-round business in Canada for at least two years;
- demonstrate a recent decrease in business activity of approximately 10%;
- demonstrate that the work shortage is temporary and beyond their control;
- submit and implement a recovery plan designed to return the Work-Sharing unit(s) to normal working hours by the end of the Work-Sharing agreement;
- not be undergoing a labour dispute; and,
- have the agreement of the union (if applicable) and employees.
Note: A franchise will be treated as a stand-alone business.
ii. Ineligible Employers
Employers who experience a reduction in business activity due to a seasonal shortage of work or any other recurring production slowdown will not be considered for Work-Sharing, as the program is not intended as a remedy for a pre-existing condition (i.e. business pattern).
The decrease in business activity cannot be directly related to an increase in the employer’s workforce. For example: a company decides to increase the number of employees from 50 to 100 in September and there is a shortage of work in December whereby there is only enough work for half of the employees. In a case like this, the current employment levels would not support a normal level of business activity. The additional employees hired in September would not be considered core employees and would therefore not be eligible to participate in the Work-Sharing program.
A Work-Sharing agreement cannot be signed with a company that is directly involved in a work stoppage related to a labour dispute. A labour dispute includes work slowdowns, strikes, lockouts and work stoppages. Companies that are experiencing a reduction in business activity attributable to a labour dispute at a component, division, branch, subsidiary, etc., of that same company are also ineligible. As well, a Work-Sharing application cannot be approved where the work reduction is solely attributable to a labour dispute at one of the company’s major suppliers or customers.
iii. Eligible Employees
Employees being proposed for a Work-Sharing agreement must:
- be "core employees" (i.e. year round permanent full-time or part-time employees who are required to carry out the everyday functions of normal business activity);
- be eligible to receive Employment Insurance benefits; and,
- agree to a reduction of their normal working hours in order to share the available work.
Although members of the Work-Sharing unit must qualify to receive Employment Insurance benefits, eligibility cannot normally be determined until after members have actually filed for benefits. Therefore, all members of a Work-Sharing unit will automatically be considered eligible for benefits unless they are told otherwise by an Employment Insurance official.
Temporary (i.e. term or contract) employees are only eligible if they are not employed on a seasonal basis and if they have maintained hours similar to permanent full-time or part-time employees within the last 12 months.
Core employees who were laid off prior to the agreement start date are eligible to participate.
iv. Ineligible Employees
Seasonal employees and students hired for the summer or for a co-op term are not eligible to participate.
Those employees performing functions essential to the development and implementation of the recovery of the company (i.e. employees who are needed to help generate business) are not eligible to participate.
Employee shareholders, whose shares provide them with significant decision-making power as to the direction of the company, are not eligible to participate in Work-Sharing. (Under the Employment Insurance Act, a person who controls more than 40% of the voting shares of a company cannot be employed in insurable employment with that company. Any employee in this position could not qualify for Employment Insurance benefits and, consequently cannot be a part of the Work-Sharing unit.)
v. Work-Sharing Unit
A Work-Sharing unit is a group of core employees who have agreed to participate in the Work-Sharing program and to reduce their normal working hours. A Work-Sharing agreement may include more than one Work-Sharing unit.
The unit generally includes all employees in a single job description. The Work-Sharing unit should not include employees who are needed to help generate work and/or employees who are essential to the recovery of the business (e.g. senior management, executive level marketing/sales agents, outside sales representatives technical employees engaged in product development, etc.). These individuals should be working full-time in support of the company’s recovery plan. Other supervisors and managers are eligible to participate and may be included in the Work-Sharing unit.
There must be a minimum of two employees in a Work-Sharing unit.
vi. Equal Sharing of Work
All members of a Work-Sharing unit must agree to reduce their normal work hours and to share the available work. If, during the period of the Work-Sharing agreement, work activity increases, the additional hours of work must be shared equally among all members of the unit. For example, a group of machine operators and a group of shipper/receivers can only form part of the same Work-Sharing unit if both groups are able to perform the job duties of the other and therefore share the available work. If the machine operators are unable to perform the job duties of the shipper/receivers, then the machine operators must form their own Work-Sharing unit.
Individual employees in the same job description cannot volunteer to participate in Work-Sharing while others decline to participate and continue to work normal hours. Members of a Work-Sharing unit who do not qualify for or who (for personal reasons) choose not to accept Employment Insurance benefits are still required to reduce their hours of work on an equivalent basis.
In the context of a unionized work environment, there must be an equal reduction of hours and sharing of all available work among members of a Work-Sharing unit regardless of any seniority clauses in a collective agreement.
vii. Employee/Union Representative
The members of each Work-Sharing unit must authorize an employee who will represent them in the agreement. Normally, the employee representative will be a member of the Work-Sharing unit. In a unionized workplace the authorized employee representative will be a member of, and designated by the union. This individual will normally be referred to as the union representative. The employee/union representative acts as the delegate and voice for all employees in a Work-Sharing unit. The employee representative works with the employer in the Work-Sharing application process and is responsible for communicating the needs and relaying any issues or concerns of the Work-Sharing participants to the employer. As well, the employee representative will ensure that the employees know what to expect when participating in a Work-Sharing agreement and provide them with a copy of the signed agreement and the Employee Annex. The employee representative must agree to what is stipulated in the Work-Sharing application and the Work-Sharing agreement by signing both documents.
viii. Shortage of Work
To be eligible for the Work-Sharing program, there must be a recent decrease of approximately 10% (or more) of a company’s business activity. In other words, employers must demonstrate a decrease of approximately 10% in sales or production levels within the last six months.
Employers must provide a record of their sales or production figures (as well as the total number of employees) over the last 24 months up to and including the last month prior to submitting the application, broken down by month as part of their completed application form (box 29 of the application form).
For example, an application submitted in June 2011 must include sales/production and employment level figures from June 2009 to May 2011, inclusive. Note: Following receipt of the Work-Sharing application, Service Canada may request figures for future months as well.
ix. Expected Work Reduction
Work-Sharing agreements must include a reduction in work activity of the employees' regular work schedule between a minimum of 10% (one half day) and a maximum of 60% (three days). In any given week, the work reduction can vary depending on available work, as long as the work reduction on average over the life of the agreement is between 10% and 60%.
The proposed reduction in work hours should correspond with the number of anticipated temporary layoffs (identified in Box 37 of the application form). For example, if an employer submits a request for a 40% reduction in the hours of work, the employer must indicate there is a need to layoff approximately 40% of the workforce. Workforce is defined as all employees working at the location of the business (Box 19 of the application form) and who are working in the section(s) of the company affected by the shortage of work.
x. Agreement Duration and Extension
Work-Sharing agreements must have a minimum duration of 6 weeks. The maximum initial agreement duration is 26 weeks with a possible extension of up to 12 weeks.
Additional Temporary Work-Sharing Extension:
The temporary Work-Sharing measure has been extended providing an additional 16 weeks to employers with an active, new or recently ended Work-Sharing agreement.
- Employers with an active agreement of 38 weeks may apply for an extension of up to 16 weeks. These extensions must end by October 27, 2012.
- Employers with a recently ended agreement, who are serving the standard waiting period between agreements, may immediately apply for an agreement of up to 16 weeks without completing the balance of their waiting period. These agreements must end by October 27, 2012.
Extensions are not automatic; all requests for an extension must be assessed and approved by Service Canada. Employers must submit an extension request form (EMP 5103) at least 30 days prior to the end date of their Work-Sharing agreement. The request for an extension must demonstrate a continued reduction in business activity that would result in the layoff of one or more employees. The employer must show that recovery of the business is well under way by providing an updated recovery plan outlining progress to date with a list of activities that will take place during the extension period that will lead to normal working hours by the end of the agreement.
xi. Recovery Plan and Attachment A
A recovery plan (Attachment B) and an Attachment A are mandatory for all Work-Sharing applications. Both documents form part of the Work-Sharing agreement.
The recovery plan must demonstrate that the employer will implement activities during the period of the Work-Sharing agreement to alleviate the work shortage in order to return the Work-Sharing unit(s) to normal working hours by the end of the agreement. The recovery plan should reflect the particular circumstances of the business, the cause of the work shortage and the conditions of the community/industry in which the employer operates.
The recovery plan template (available in HTML and Word format) must be completed by the employer. More information on what is required for the recovery plan can be found in section E, subsection i of this guide.
The Attachment A lists all employees who are participating in a Work-Sharing agreement (i.e. the members of the Work-Sharing unit). All non-union employees must sign the Attachment A; their signature indicates that they agree to participate in Work-Sharing and to reduce their hours of work. The Attachment A must also be signed by the employee representative. Union employees are not required to sign the Attachment A, however, the union representative must sign the document on their behalf. The union representative’s signature indicates that all union employees in the Work-Sharing unit agree to participate in Work-Sharing and to reduce their hours of work.
[Footnote 4] A publicly-held company is a for-profit company whereby its shares/stocks are owned by the general public. Public sector employers, including government or publicly-owned corporations, such as crown corporations, are not eligible for Work-Sharing. (Return to footnote 4 source paragraph)