April 06, 2020
Partner Mitch Frazer has told the Financial Post while the big banks “may have been the logical choice” to manage the payroll subsidy system, it might not be practical given the new work that the COVID-19 pandemic has created for them.
Mitch’s comments come in a Financial Post article that explores the payroll subsidy system and whether the Federal Government’s choice to build a new system within the CRA was the right move, given it might be six weeks until the payments are seen by businesses.
The decision to do so has been criticized by business industry groups, who have said “the wait is too long to avoid layoffs”.
Mitch said the scope is different to the global financial crisis in 2008 and 2009 and doesn’t think it’s practical for the banks to manage the system.
“I think what people are looking at is, in an ideal world, who can deliver this most efficiently… (but) this is an unprecedented economic event,” Mitch told the Financial Post.
Mitch added that the system will work, and the money will eventually flow even without the banks, because the money is guaranteed by the government. The article also said “some businesses can access an interest-free loan of up to $40,000 to help them bridge the gap until they receive funds through the emergency wage subsidy program.
“You can use the loan to pay for the payroll costs and then get reimbursed,” he said.
You can read all Mitch’s comments on the issues on the Financial Post website.
Mitch and a team of Torys lawyers have written a piece on the wage subsidy program in light of COVID-19. You can learn more about considerations for your organization by reading “COVID-19 and the workplace: new details on the Canada Emergency Wage Subsidy”.
At Torys, we understand the how the pandemic is presenting challenging and unique circumstances for businesses. We are keeping close watch on developments as they unfold, and have established a resource centre on our website, COVID-19 guidance for organizations, where you can find our latest updates for businesses navigating COVID-19-related issues.