By Jordan Press
THE CANADIAN PRESS
OTTAWA _ The federal government is in talks with business and labour groups to figure out the future of billions in emergency aid, Prime Minister Justin Trudeau said one day after a warning that current spending was sustainable for only so long.
Emergency federal aid to date is approaching $152 billion in direct spending, which has pushed the deficit to an estimated $260 billion this fiscal year.
Parliament’s spending watchdog told a Senate committee Tuesday that current spending levels would limit the government’s ability to provide needed stimulus money during a recovery.
Budget officer Yves Giroux also said emergency programs had to sunset or else the country could be looking at tax levels not seen for generations.
Speaking outside his Ottawa residence Wednesday, Trudeau said some of the aid programs will have to be phased out.
Others, he said, would need to continue or be tweaked to aid in a recovery.
“We are still very much in the emergency phase, in the crisis phase of this, even as we’re seeing careful reopenings,” Trudeau said in response to a reporter’s question.
“We will, however, look very carefully at how we end certain programs, how we modify others in order to get our economy going again to where it was before (the pandemic) or even better.”
In his opening remarks, Trudeau seemingly previewed his thinking on the issue. He said fewer people would need help through the Canada Emergency Response Benefit as businesses reopen and workers are rehired, possibly with help from a federal wage subsidy.
The most recent CERB figures show more than $41 billion in benefits to 8.25 million people, pushing further beyond its $35-billion budget.
The first cohort of CERB recipients will max out their benefits the first week of July, raising questions about what to do with those who still don’t have a job, or those who can’t qualify for employment insurance.
“The focus of the next phase of the CERB has to be about those individuals and also create incentives to work for those individuals where some job may be available for them,” said Parisa Mahboubi, a senior policy analyst with the C.D. Howe Institute.
“The way that the CERB is designed may discourage them from accepting the job or looking for any job.”
A group of experts convened by the think tank recommended the government consider extending CERB eligibility beyond the July cutoff, but turn it into an income-tested benefit for those who go back to work.
Treasury Board President Jean-Yves Duclos told a midday press conference the CERB would likely lead to another support measure because something new will be needed to create a smoother recovery phase. What that might look like, he didn’t say.
Having greater transparency about support programs would help Canadians determine if money is being spent well, and maintain the credibility of aid programs while deterring fraud, said Toby Sanger, director of Canadians for Tax Fairness.
“You would just have better designed programs,” he said. “There could be better third-party judging of how well these programs have worked or haven’t worked.”
He cited a request from his group and others for public details on companies that receive federal support, such as through the $73-billion wage subsidy program.
Federal figures showed there have now been 181,883 unique applicants approved for the wage subsidy, which covers 75 per cent of wages up to a maximum of $847 per week for each eligible employee.
The total value of benefits paid stands at $7.9 billion.
Trudeau urged companies to sign up for the wage subsidy during his opening statement, echoing his request for landlords to use a commercial rent assistance program that opened for applications this week.
That program offers forgivable loans to cover half of monthly rents in April, May and June, as long as landlords drop rents by at least 75 per cent over the same period for eligible small businesses.
Giroux estimated the net federal cost of the program at $520 million this fiscal year. The budget officer’s report released Wednesday morning put caveats on that estimate, owing to the lack of clear precedent for this kind of program.
His report said that means the assumptions about industry eligibility and uptake by landlords “rely heavily on judgment.”
The excerpted article was written by Corey Mintz
Buying insurance is placing a bet you’d rather not have to collect on. It’s hoping for the best but planning for the worst. We pay monthly fees to a company just in case something terrible happens. If it does, the company agrees to cover our financial loss. Then COVID-19 hit, and something terrible happened to all of us.
In the past two months, the issue of insurance has come up repeatedly for restaurateurs, who pay for a specific type called business interruption. It can cover closure due to such events as municipal construction, burst water pipes, and riots. I spoke with two restaurateurs who have successfully claimed coverage after broken pipes forced their closure, in one case for five days and in the other for four months (although she is still waiting on a cheque). Neither has attempted to file a claim based on the pandemic. Most believe, or have been told, that the widespread shutdown of restaurants is not covered under interruption insurance.
Then I spoke with Hemant Bhagwani. The founder of the Amaya restaurant chain, plus a few other dining concepts, he has 29 restaurants in Ontario and more than 600 employees.
Bhagwani is availing himself of the Canada Emergency Wage Subsidy, which covers 75 per cent of payroll and requires employers to take care of the rest. Most of his restaurants are shuttered. A couple are doing takeout. And while he says some of his landlords are being reasonable (and currently exploring the possibility of the Canada Emergency Commercial Rent Assistance for small businesses), the total rent for these properties is about $700,000 a month.
“In 22 years of business, I have not taken a single penny from the insurance companies,” Bhagwani told me on April 24, just as the federal government was announcing the CECRA. “They keep increasing their premiums every year. So this is the time for them to support us a little bit. And they’re just washing their hands.”
“Government is doing so much,” said Bhagwani, as we both paused to listen to the prime minister’s live address. “Landlords are trying their best to help us. The only people who are not coming out are the insurance companies. I feel it’s very wrong. I’m ready to take them to court.”
On May 5, Bhagwani followed through, filing a claim for damages against his insurer, Allianz Global Risk, for $500,000 in combined revenues, $200,000 in punitive damages, and 90-days’ worth of payroll expenses.
“I think he’s wise to bring the action,” says Lawrence Swartz, a professor at Osgoode Hall Law School.
“It’s very rare that people claim insurance. Typically, you pay the premiums, and you don’t make a claim,” says Swartz, who has worked extensively in the financial and insurance sectors. “The reason you buy insurance is to get the coverage for these types of situations. Your typical person who is a restaurateur should think that an interruption includes a pandemic.”
A spokesperson for Allianz told TVO.org via email that the company is “unable to comment on individual claims settlements or pending legal matters” and that, as a result of the pandemic, it “has been notified of a large volume of claims from businesses around the world which we evaluate on a case by case basis to determine coverage.” They added, “We will certainly honor COVID-19-related claims where they are part of our policies and cover is clear. However, many businesses will not have purchased cover that will enable them to claim on their insurance for COVID-19 pandemic losses.”
Swartz can’t speak to the specific merits of Bhagwani’s case without examining his policy. But, in general, he sees the court leaning in favour of the restaurateur.
“If the company wanted to exclude a pandemic, they have to say so in the insurance contract. And if they didn’t, the presumption I think, by the courts, would be that the restaurant should be covered,” he says. “Because courts tend to interpret exclusions narrowly, they give somewhat of a benefit of the doubt to the purchaser of the insurance policy. And they tend to interpret coverage broadly.”
Another factor on Bhagwani’s side, Swartz says, is a legal principle that tends to apply in the case of insurance contracts. Known as contra proferentem, it means that, when the intention is ambiguous, the preferred meaning is the one that works in favour of the party that didn’t draft the contract.
Whatever happens with Bhagwani, Swartz sees this lawsuit as a good example for others in the industry to follow. “Every restaurant should presume that they have coverage,” he says. “This is a situation where they need help. And that’s what insurance is for. It’s for unforeseen disasters.”
Swartz urges owners to contact their lawyer or insurance broker, to look at their contracts to see whether the policy specifically excludes a pandemic, and to ask for claim forms.
“Restaurant owners should be in touch with their insurers and brokers. They should be asserting their rights,” he says. “They should assume that they have coverage, and they should proceed as if they do. It should be on the insurers to explain to them that they don’t if they don’t and to be very specific in why they don’t. Insurance companies shouldn’t be trying to wiggle out of their responsibilities.”
If a court rules in favour of Bhagwani, other suits will likely follow. What would that mean for the insurance industry? The business is predicated on the odds that disasters don’t usually happen every day and to everyone at once. If every restaurant in Canada claims interruption insurance, and the courts support them, could this bankrupt insurers?
“The insurance industry, going into this, was fairly strong,” explains Swartz. Insurance companies are sometimes part of big conglomerates that back them up, and they cede part of their risk to reinsurance companies. “So insurers have insurance themselves.”
However, that doesn’t mean that they’re bulletproof.
“This is a cataclysmic even,” Swartz says. “It wouldn’t be impossible for a number of insurance companies to go bankrupt.”
Corey Mintz is a Toronto-based food writer.
By Lee Berthiaume
THE CANADIAN PRESS
OTTAWA _ Prime Minister Justin Trudeau says he’ll push the provinces to give workers 10 days of paid sick leave a year as the country deals with the COVID-19 pandemic.
That appears to meet a key demand from NDP Leader Jagmeet Singh, in exchange for the New Democrats’ support for a motion to limit sittings and votes in the House of Commons through the summer.
Singh laid out the demands on Monday morning, shortly before a small number of members of Parliament returned to the House of Commons to begin debate over the future of parliamentary sittings for as long as several months.
The debate will revolve around a Liberal proposal to waive “normal” House of Commons sittings in favour of expanding the special COVID-19 committee that has acted as a sort of stand-in for the past month.
Because they hold only a minority of seats, the Liberals need the support of at least one of the main opposition parties to pass this motion.
The Conservatives are expected to oppose the motion as they push for an end to the COVID-19 committee and the resumption of Commons sittings, albeit with no more than 50 MPs in the chamber at any time.
Bloc Quebecois Leader Jean-Yves Blanchet said Monday his party isn’t participating in negotiations around the return of Parliament.
The Bloc previously laid out a set of conditions it wanted met before it would engage in discussions around how Parliament could sit.
Those included more help for businesses to cover their fixed overhead costs and a straightforward plan for how the Liberals would follow through on a promise of financial support for seniors.
Blanchet said the Liberals have followed through on neither, and ensuring they do is his priority.
“Every time we spend five minutes talking about parliamentary rules, we’re spending five minutes less talking about what Quebecers require,” he said.
He said his party will likely go along with whatever consensus is arrived at to govern how the House of Commons sits for the next while. The Bloc won’t argue about who drives that bus or where it’s going, Blanchet said, but when it comes, the Bloc will probably get on board.
That leaves the NDP, with Singh said his party is willing to support Liberals’ motion for a price.
“We are continuing to make it clear that we need a commitment that the government is willing to provide paid sick leave for all Canadians,” Singh said during a news conference on Parliament Hill.
“We’re suggesting the government can use something like the (Canada Emergency Response Benefit) or employment insurance to deliver that program federally immediately. But we want to see something that is long term and that will require working with provinces and employers to deliver a long-term commitment so that forever in our country, everyone who needs paid sick leave will have access to it.”
Singh is also demanding the government make good on a promise to provide more support to Canadians with disabilities who are struggling during the pandemic.
“If the government does not deliver on paid sick leave for all Canadians and real support for Canadians with disabilities, then we will not be supporting the motion,” he said.
Trudeau said it makes sense to support paid leave for all workers if they’re ill, so that people who might be sick with COVID-19 don’t have to choose between going to work sick and sitting at home unpaid. He acknowledged that he’d had discussions with Singh on the issue on Sunday.
The battle over the future of Parliament in the age of COVID-19 has largely coalesced around the limitations and uncertainty associated with virtual House of Commons sittings as they butt up against demands for full parliamentary representation and accountability during the pandemic.
The Liberals on Saturday unveiled their proposed solution, which would see “normal” House of Commons sittings put aside in favour of expanding the special COVID-19 committee.
The motion proposes adding an additional day to the committee’s current schedule of one meeting a week in person, with fewer than three dozen MPs actually present, and twice a week virtually.
The Liberals are now proposing four meetings a week until June 17 with a hybrid of in-person and virtual attendance that would see a small number of MPs in the Commons chamber and others participating via two large video screens set up on either side of the Speaker’s chair.
The motion also proposes four sittings of the House of Commons in July and August, each with a question period that would allow MPs the chance to ask cabinet ministers about issues unrelated to COVID-19 _ a key issue of contention for the Conservatives in recent weeks.
The Conservatives have nonetheless indicated they want to do away with the special COVID-19 committee and bring back House of Commons sittings, which includes opposition days, private members’ business and other activities that cannot occur with the committee format.
The key hangup for both sides of the debate appears to be around representation as the House of Commons’ administration works through the technical limitations on virtual attendance.
Those limitations were highlighted in a report by a Commons committee two weeks ago, including concerns about hacking when it comes to MP votes and procedural questions such as how to handle points of order and privilege.
Monday May 18, is Victoria Day (Journée nationale des patriotes, or National Patriot’s Day, in Quebec); a holiday which most employees are entitled to take off and receive public holiday pay. The COVID-19 pandemic has resulted in emergency leaves, temporary layoffs and reduced schedules. As a result, some may have lost track of upcoming long weekends and public holiday pay requirements. Below is a refresher on employee entitlement to public holiday pay in Ontario and how to calculate pay for employees who’s employment has been affected by COVID-19.
Public Holiday Pay
Generally, employees qualify for public holiday pay on Victoria Day if they have worked all of their last regularly scheduled workday before the public holiday or all of their first regularly scheduled workday after the public holiday, or have reasonable cause not to have not done so. This means that some employees whose work has been affected by COVID-19, will still be entitled to the public holiday pay for Victoria Day.
For example, an employee might not be scheduled to work the day right before or after the holiday. As long as the employee works all of their last regularly scheduled shift before the holiday and all of the first one after it, or has reasonable cause for not doing so, they will be entitled to public holiday pay.
Employees on Leave or Layoff
Employees may be entitled to public holiday pay while on leave, including a protected leave related to COVID-19, such a declared emergency leave. If the employee worked the last regularly scheduled day of work before the leave, and the first regularly scheduled day of work after the leave, or has reasonable cause for failing to do so, he or she will be entitled to the paid public holiday.
Similarly, an employee on layoff may be entitled to public holiday pay for a public holiday that occurred while they were laid off as long as he or she works their last regularly scheduled day before the lay off began and her first regularly scheduled day after being recalled, or has reasonable cause for failing to do so, they will be paid for the public holiday.
Calculation of Public Holiday Pay
Despite being entitled to public holiday pay, depending on when the employee took leave or was laid off, the calculation may still result in no payment. Holiday pay is calculated using the regular wages earned by the employee in the four work weeks before the week with the public holiday, plus all of the vacation pay payable during those four work weeks before week with the public holiday, divided by 20.
So, if the employee has spent more than four weeks without wages or vacation pay before the week of Victoria day, the amount of holiday pay collected will be $0. Employment Insurance benefits received during a leave or layoff do not count as wages, and thus will not be counted in the calculation of public holiday pay.
Employees with Reduced Hours
Employees who have reduced hours of work due to COVID- 19 are still eligible for public holiday pay. Specifically, if the employer has agreed to or imposed a reduced work schedule, and the employee works the full reduced shift before the holiday, they will qualify. However, as with leaves and layoffs, employees must have earned wages or vacation pay in the four work weeks before the public holiday, otherwise the amount to which they are entitled will be $0.
Victoria Day, this Year
For many, the May long weekend traditionally means getting the yard and garden ready for summer, and/or spending time with family and friends. However, for many, getting together with loved ones, and shopping for summer goods in the stores may be challenging or not possible. As the long weekend approaches, it is important to remember to socially distance and observe all guidance provided by government authorities. On that note, we wish you a safe and healthy long weekend.
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For more information about Norton Rose Fulbright, see nortonrosefulbright.com/legal-notices.
Law around the world
OTTAWA _ While there’s reason to believe the spread of COVID-19 is slowing, Canadian leaders warned Wednesday it was too soon to ease distancing measures, even as the country’s central bank warned the downturn tied to the virus could be the worst on record.
On the day Canada passed the grim milestone of 1,000 deaths, chief public health officer Dr. Theresa Tam nonetheless said there is cause to be “cautiously optimistic” that the rate of growth is slowing.
Tam noted the number of cases in the country is now doubling every 10 days or so, compared to every three days in late March.
But she said Canada still hasn’t reached the peak of the outbreak, and it’s too soon to back off physical distancing measures.
“Coming down from this epidemic curve will be like making our way down from a mountain in the darkness,” Tam said during her daily briefing in Ottawa.
“We mustn’t rush or let go of our safety measures, or the fall will be hard and unforgiving.”
Prime Minister Justin Trudeau warned it would still be several more weeks before the country will be able to consider loosening restrictions that have caused businesses to shutter and put the economy in a tailspin.
Widespread testing and the ability to rapidly track down the contacts of infected people will be key to an eventual return to normal activities, he said.
“We have to be through this first wave sufficiently to be able to know we have the capacity to stamp out and restrict any future outbreaks as they come along,” Trudeau said.
“That means technology, that means better testing capacity, that means continued vigilance _ not just by governments but by all Canadians…. We’re still a number of weeks away from that.”
Trudeau announced New Brunswick company LuminUltra was increasing production of chemicals needed to provide the required weekly supply for COVID-19 tests in all provinces. The country has also received more shipments of the swabs needed for the tests, he said.
Millions have lost their jobs as the pandemic has forced the closure of businesses, and consumer spending has plummeted as people have been urged to stay home to stop the spread of the virus.
Economic activity dropped a record nine per cent in March alone, preliminary data released by Statistics Canada suggested.
The estimate, which is to be refined over time, would be the sharpest decline in the nearly 60 years the agency has kept such data.
Despite the bleak economic news, Trudeau was blunt as he warned that easing restrictions too soon could unleash a second wave of infections just as damaging as the first.
“If we reopen too soon, everything we’re doing might be for nothing,” the prime minister said.
Provinces including Manitoba, P.E.I., New Brunswick, and Newfoundland and Labrador each reported three or fewer new cases on Wednesday, but devastating outbreaks continued to sweep through long-term care centres in other jurisdictions, killing vulnerable seniors by the dozens.
The death toll across the country surpassed the 1,000 mark with the announcement of 51 more fatalities in Ontario and 52 in Quebec.
As of Wednesday afternoon, the country counted more than 28,200 confirmed COVID-19 cases, with over half of them in Quebec.
Premier Francois Legault made a desperate plea for family doctors and medical specialists to help out in long-term care homes, where major outbreaks have exacerbated long-running staffing issues.
Quebec has released a five-page list of seniors residences and care homes with at least one COVID-19 case, including 25 institutions where at least a quarter of residents are infected.
Those include a long-term care home in Laval, north of Montreal, which counted 26 dead and 120 infected.
Ontario, meanwhile, had 98 facilities reporting COVID-19 outbreaks that have together killed at least 145 residents, including 29 who died at Pinecrest Nursing Home in Bobcaygeon, and 27 at Eatonville Care Centre in Toronto.
On the economic front, the Bank of Canada on Wednesday kept its key interest rate target on hold at 0.25 per cent, saying that it is effectively as low as it can go.
It warned the downturn tied to COVID-19 will be the worst on record and the economic recovery will depend on the effectiveness of current measures to bring the pandemic under control.
By Sunday night, some six million people had applied for a $2,000-a-month emergency benefit.
To give a boost to struggling workers, Trudeau expanded the criteria of the Canada Emergency Response Benefit on Wednesday to include seasonal workers, those who are still working but earning less than $1,000 a month and those whose employment insurance has run out.
He said he would also be working with the provinces to raise the salaries of essential workers who earn less than $2,500 a month, which includes many working in care homes.
OTTAWA _ Prime Minister Justin Trudeau says the partial shutdown of Canada has to last weeks more to get COVID-19 under control, using his strongest warning yet against loosening economic restrictions too soon as he unveiled expanded help for hard-hit workers.
In the last month, the national economy has contracted sharply as businesses have been ordered closed and Canadians told to stay home.
Preliminary data from Statistics Canada on Wednesday showed economic activity collapsed in March, suggesting the drop could be a record nine per cent.
In a fierce warning from in front of his residence in Ottawa, Trudeau says the country is still contending with the first wave of the novel coronavirus pandemic.
Loosening controls too quickly could mean the country gives up the ground gained, he says.
That could cause even greater economic damage than the pandemic has already inflicted.
“With spring coming, people are looking outside, wanting to get out, wanting to this to be over I understand that. It will be weeks more before we can seriously consider loosening the restrictions,” he said.
“As impatient as people are getting all across the country, we need to continue to hold on if what we’re doing as sacrifices are going to be worth it.”
To help, the federal government is loosening the eligibility criteria for emergency federal pandemic aid to cover seasonal workers without jobs and workers whose hours have been drastically cut but who still have some income.
The details announced this morning will allow people who are making up to $1,000 a month to qualify for the Canada Emergency Response Benefit for COVID-19.
And those whose employment insurance benefits have recently run out will also qualify for the $2,000-a-month benefit.
Some six million people have applied for the help since the middle of March when businesses were ordered closed and workers to stay at home as a public health precaution.
For those doing jobs deemed essential, Trudeau says the federal government will top up their pay to encourage them to keep going into work during the health and economic crisis.
The Bank of Canada is warning that the downturn tied to COVID-19 will be the worst on record and that the economic recovery will depend on the effectiveness of current measures to bring the pandemic under control.
The bank announced that it is keeping its key interest rate target on hold at 0.25 per cent, saying that it is effectively as low as it can go to combat the economic impacts of COVID-19.
If conditions improve quickly, the economic shock is likely to be “abrupt and deep, but relatively short-lived” and followed by a strong rebound for most, but not all, sectors of the economy.
A more severe scenario would likely see a “significant number” of businesses closing for good and longer spells of unemployment as workers look for new jobs.
A longer downturn would also mean households, businesses and governments could have higher debt by the time the recovery takes hold.
No matter the scenario, all the possibilities suggest “the near-term downturn will be the sharpest on record,” the report reads.
“The outlook is highly conditional on how long the containment measures remain in place, and how households and firms adapt,” governor Stephen Poloz said in his opening remarks during a morning teleconference.
He added that “substantial monetary stimulus needed to be in place to lay the foundation for the post-containment economic recovery.”
The monetary policy report is the last one that Poloz is to be a part of, with his tenure at the head of the central bank scheduled to come to a close on June 2.
He was involved in the first monetary policy report published 25 years ago. Poloz said that he wished the circumstances for his last were “more favourable.”