Federal government adapts business supports to Omicron-driven capacity restrictions or lockdowns

Note: As with all new federal programs, full details tend to emerge over several weeks, as issues and questions arise and are answered. We will likely not have full details until well into January, but in time for the first applications to be made under the new programs.

The Government of Canada has introduced new business and employee supports in response to mandatory capacity reductions. Notably, the changes drop the revenue loss threshold for business supports from 50% (under the HASCAP program) to 25% and also drop the need to show a cumulative 12-month revenue decline.

The rules are somewhat complex, so the best resource is the government’s own backgrounder.

In a nutshell, there are two programs, the first of which is called the Local Lockdown Program (LLP). Under the LLP, capacity-limiting public health restrictions at 50% or more may give rise to direct financial support to businesses for wages and rent. 

If local public health rules reduce one or more locations’ customer capacity by at least 50% and this in turn reduces the entity’s revenues by at least 25% compared to the comparator period in 2019, then there is a straight-line subsidy for the loss (e.g., a 34% reduction in revenues will generate a 34% subsidy on rent and payroll).  The maximum assistance tops out at a 75% reduction in revenue.  The key here is that the revenue reductions are measured at an enterprise level, not at a store level.

There is a second condition precedent along with the one above.  The activities affected by the public health orders must have accounted for 50% of the enterprise’s revenues during the prior reference period (i.e., the comparator month in 2019).

There is no need to demonstrate a cumulative 12-month decline in revenues as there was under the earlier program.

These changes will be in place from December 19, 2021 until February 12, 2022 unless extended in future.

The second program is more akin to the former CERB program and is called the Canada Worker Lockdown Benefit (CWLB). This program will pay a benefit of $300/week to workers who attest that they have seen their compensation reduced by at least 50% in consequence of local lockdown rules.  It excludes those who receive EI benefits in the same period and also specifically excludes those whose incomes have been reduced in consequence of refusal to adhere to a workplace vaccine mandate.