An Alternative To Layoffs? Look Into Work Sharing
Program options in the United States and Canada provide ways to keep your valuable talent and avoid layoffs.
There are novel programs available for avoiding staff layoffs which aren’t talked about much or even publicized. The CARES Act in the United States and the Work-Sharing (WS) program in Canada are designed to help employers and employees avoid layoffs when there is a temporary reduction in business activity beyond the employer’s control. Very few companies take advantage of the CARES Act and WS programs, mostly because they are not well known or well advertised.
The global pandemic has hit companies hard, with some economists noting that we are seeing unemployment at levels not seen since at least 2008. With the pressure mounting on companies to make monthly payroll, a lot of business owners are having to make tough decisions: do I dip into my savings to keep staff, do I lay them off outright, or do I furlough them for a time? These are all less than ideal concepts. Many business owners are trying to do what’s right for their people and their company, looking forward to a time when those valuable resources will be needed more than ever. If you are a business owner or business leader, you might want to take a close look at programs in North America like the CARES Act in the US, and the WS program in Canada. Here is some basic information to get you started.
The CARES Act and Short-Term Compensation (STC) In The United States
The Cares Act in the US is available now in 29 states. Designed to provide Short Term Compensation (STC) relief, the program lets employees to keep their jobs while working fewer hours. In this time, they collect unemployment benefits equal to the hours lost. As an example, an employee might be reduced to 30 hours a week. Lost income is made up by unemployment payment benefits equal to 10 hours of work lost a week. Employers can keep their talent and the lost hours are paid for by STC.
Section 2108 of the CARES Act provides 100 percent federal funding to existing STC programs. It also provides $100 million for states without STCs to start work-sharing programs, which will cover 50 percent of the benefits.
Work-Sharing And Unit Work-Sharing In Canada
The Canadian WS Program is different in its specifics, but the desired outcomes remain the same, preserving jobs, talent, business continuity and flexibility. In the case of WS program in Canada, the employer and employee agree to reduced hours. 55% of the lost income comes from Service Canada. For example:
- Sam works full-time at an engineering firm earning $769 per week
- Due to COVID-19, the firm has faced a significant reduction in workload
- The firm enters a WS agreement with Sam and Service Canada where all unit members reduce their work by 35%
- If Sam does not agree to the voluntarily reduced work hours, Sam will be laid off and receive $423 per week (55% of weekly income)
- If Sam agrees to reduce work hours by 35% then the following:
- $500 per week from employer (65% of previous weekly income)
- $148 per week from Service Canada (55% of the lost income)
- Sam now has the potential to earn $648 per week and stay in job
A WS unit is a group of eligible employees who agreed to the WS program. The unit will usually include those working at the same or similar jobs within a company. Typically, a work-share unit will not include employees such as senior management or outside sales representatives, and the unit needs to be a minimum of two people.
The WS unit agrees to reduce normal work hours and share available work. If hours of work increase during the period the employees are in the program, the available work hours need to be shared equally across members of the work-share unit. The unit will be represented by one of the employees under the WS program, and this person will communicate employee issues or concerns to the employer.
Work sharing can give employers different long-term options. These programs can offer immediate cost savings and give companies strategic planning time to consider next steps while providing equilibrium to the employer and the employee. Flexibility in work share arrangements benefits businesses in an ever fluid situation, and potentially lessen the impact on companies and employees. To learn more about The CARES Act and short-term supplemental help in The United States, visit The US Department of the Treasure website, hyperlinked here. For more on work sharing and unit work sharing in Canada, visit the Service Canada website, here.
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