Work-Sharing Brochure

Facing difficult times —
what are your options?

When a company faces difficulty beyond its control and is forced to cut back production, it may have only two courses of action. It can either lay off workers temporarily or make an agreement with the affected employees to participate in a Work-Sharing arrangement.

What is a Work-Sharing Agreement?

Work-Sharing is a program that enables employers to face cutbacks and still avoid layoffs. The program enables this by shortening the work week by one to three days and paying reduced wages accordingly. For the hours, days, or shifts not worked, Human Resources and Skills Development Canada (HRSDC) arranges for Employment Insurance (EI) eligible workers to draw benefits, to help compensate them for the lower wages received from their employer.

Win-Win situation

Work-Sharing benefits workers:

• they avoid the hardship of being laid off;
• they retain their work skills.

• valued employees are retained;
• staff morale is strengthened;
• expensive rehiring and retraining costs are avoided.

Working together

Management and workers must agree to participate in Work-Sharing and apply together. Representatives of the company and the workers must sign the application and all resulting agreements with HRSDC. All agreements must be signed in advance of the start date. Any time during the agreement, the employer, the employees, or HRSDC have the right to terminate the Work-Sharing Agreement.

A temporary measure

Agreements can be from a minimum of 6 weeks to a maximum of 26 weeks. These agreements can be extended, in exceptional circumstances, by up to 12 weeks with approval by HRSDC.

The employer is responsible for setting up a schedule of work hours and notifying HRSDC officials of any changes in the time worked and the number of employees on Work-Sharing. Work-Sharing Agreements do not affect workers’ rights to regular EI Benefits if they happen to be laid off after the agreement ends.

No waiting period for Benefits

Participants do not have to serve a two-week waiting period for Work-Sharing Benefits. However, benefits are processed through the EI payment system, meaning it will take a few weeks for the first cheques to arrive.

For example, under Work-Sharing, a person earning $350 for a 40-hour work week would receive a total sum of $319 for a 32-hour week (loss of 8 hours of work) paid as follows: $280 in wages and $39 in EI Benefits. Every two weeks, the employer must verify each claimant’s report card after it has been filled out.

EI Benefits are taxable and are subject to the rules and regulations of the Canada Customs and Revenue Agency Act. In certain cases for high income workers, a portion of the EI benefits under Work-Sharing may have to be repaid when the annual income tax return is filed. An explanation of how and when this is necessary is available at your local Human Resource Centre of Canada in the information sheet, “Repayment of EI Benefits by High-Income Claimants.”

Who can participate?

Permanent full or part-time employees of a company may participate. The minimum number of employees in a Work Sharing Agreement is two. In order to receive Work-Sharing benefits, workers must be eligible to receive regular EI benefits.

How can employers qualify?

To be eligible, an employer must have been in business in Canada for at least two years.

The company must also be able to show that the need for reduced hours is temporary and unavoidable, and is not a seasonal situation. A detailed Recovery Plan is required, outlining how the company will return to normal production schedules and hours of employment at the end of the Work-Sharing Agreement.

No Work-Sharing Agreement can be approved or continued during a labour dispute.

For more information

For further information contact the Human Resource Centre of Canada nearest you or visit our Web site at:
http://www.hrsdc.gc.ca/

ALTERNATIVE FORMAT

This document is available in either large print, audio cassette, braille or computer diskette. To obtain this publication in alternative format, call 1 800 788-8282

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