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The rapid spread of COVID-19 and the introduction of strict government measures are limiting or changing many businesses’ operations. These measures impose unusual restrictions that make it more difficult to meet certain contractual obligations. In such a situation, many companies will want to assess the possibility of modifying certain undertakings and terms of their contracts in order to get through the pandemic and resume their business activities post-crisis. To that end, we have gathered a few thoughts on how to look into negotiating a temporary agreement, some legal principles that can be applied to begin discussions and negotiations, and some other elements to consider in a negotiation approach, which we share with you below. How to do it and where to begin: some ideas It is relevant to review all your contracts and sort them to determine which are essential for your business operations and which have the most significant financial impact.  Think about the other contracting party as well, who may also be affected by the pandemic. Has the other party defaulted of performing its correlative obligations to you, or is your inability to meet your obligations causing it prejudice in any way?  Most of the obligations included in a contract cannot be changed unilaterally. However, contracting parties must still perform their respective obligations in good faith. The occurrence of an exceptional situation such as COVID-19 is likely to force each of the parties to act more flexibly in order to comply with their duty of good faith. It is possible to validate whether some of these contracts, by their very nature, are still relevant or whether they will remain relevant once the curve flattens and economic activity recovers. For less relevant contracts, you can check whether they include provisions allowing for unilateral termination, by the mutual agreement of the parties or by a particular mechanism. Otherwise, you could then consider initiating a discussion with the other contracting party to negotiate certain terms of the agreement in order to mitigate negative impacts, if any, during the pandemic.  For each contract that must be maintained, you can list all the obligations that you are unlikely to be able to meet, in whole or in part, as well as those that your contracting party might not be able to meet, in order to open the door to an out-of-court  negotiation of certain provisions for the coming months. In your analysis, you should pay particular attention to the following clauses: Default: What constitutes a default under the terms of the contract? What are the consequences of defaulting? Does a default under this contract constitute a default under another contract? Does the contract provide for a time period to cure a default? On what conditions? Time limit: Does the contract set specific time limits for the performance of certain obligations? Which ones? Does the contract provide for the possibility of postponing the time limit for its performance? Should a notice be sent to this effect? Does it expire soon? Exclusivity: Is the contract exclusive? Can this exclusivity be overridden? Under what circumstances and on what conditions? Force majeure: Does the contract include a superior force clause (most commonly called a “force majeure”) forgiving a party’s inability to perform its obligations? What happens to each party’s obligations, especially financial obligations, in a context of superior force? Although the Civil Code of Québec defines such a notion, the contract can always provide its own definition. A case of superior force usually requires the presence of an unforeseeable, irresistible event external to the party invoking it. Continuous information: Does the contract provide for the obligation to keep the other contracting party informed when certain events occur? If so, which ones? Is COVID-19 or any other pandemic included? Negotiation: Does the contract provides for the parties the possibility to renegotiate certain terms ? Which ones? When? On what conditions? Payment: Does the contract set out time limits for payments to the other contracting party or for making any other kind of payment, depending on the nature of the contract? Does it provide for additional time limits to proceed to the payments? What is the impact of delaying or not making a payment? Financial performance: Does the contract establish financial performance criteria (e.g. compliance with certain financial ratios)? How often? What are the consequences of not meeting these financial criteria? Penalties: Does the contract contain penalties for late payment of certain amounts or for failure to meet certain contractual obligations? When is this penalty due? What amount can it reach? Liability: Is the liability of the contracting parties unlimited under the terms of the contract or does the contract instead provide for limits on the amount that may be claimed?(maximum/minimum amount)? Is there a predetermined time limit to make a claim? Does the contract provide for a notice to be sent to this effect? Dispute resolution: Does the contract provide for a dispute resolution process? Mediation or arbitration? Under which conditions can these mechanisms be applied? List all the impacts that result from a breach of obligations (e.g., penalties, notice of default, interest), and make a list of viable proposals that you can submit to the other contracting party as an alternative. What legal principles can you use to negotiate a temporary agreement with your contracting party or a postponement of your obligations?  Certain provisions or legal principles may make it possible to terminate a contract or may serve as arguments for a temporary agreement or a postponement of your obligations. Here are a few examples. (This list is non-exhaustive, of course.) Force majeure Some parties to a contract will want to invoke the concept of superior force to terminate or temporarily suspend the effects of the contract. Although this concept is interesting, it applies only to very specific situations and its application is not generalized. As previously mentioned, the Civil Code of Québec1 provides that superior force is an unforeseeable and irresistible event that must not arise from the actions of the contracting parties. Depending on the nature of the obligations covered, a contracting party may be released from its obligations or have its successive obligations suspended during the superior force period. The contract may also provide for other parameters and circumscribe the terms of what may constitute a case of superior force between the parties. The right to invoke superior force requires a case-by-case assessment of each contract and of the relationship between the parties. In any event, a party that is unable to perform its obligations, in whole or in part, must take all steps at its disposal to minimize its damage. You will find more information on the concept of superior force and its application in the bulletin The Impact of COVID-19 on Contracts.  Right to terminate Certain contractual provisions may allow for resiliation (termination) by either party, on specific terms or for specific reasons. Some contracts will provide for a termination mechanism at either party’s discretion or further to their mutual consent.  In the absence of such clauses in the contract, it remains essential to characterize the nature of the contract, since legislative provisions could allow its resiliation. That is also the case of a contract of enterprise or a contract for services, which the client may unilaterally resiliate as permitted by sections 2125 and following of the Civil Code of Québec, subject to certain limits, of course. Before deciding to unilaterally resiliate a contract, it is important to consult your legal advisor in order to properly determine the nature of the contract, validate its terms and conditions with respect to resiliation and determine the possible impacts of such resiliation (e.g., penalties, prejudice to the other party, etc.). Obligation of good faith in contractual performance The obligation of good faith imposes certain contractual duties, including those of loyalty and cooperation. The duty of loyalty entails certain prohibitions such as not increasing the burden on a contracting party, not compromising the contractual relationship, and not engaging in excessive and unreasonable2 behaviour. The duty of cooperation, on the other hand, is more positive in nature and aims for assistance and collaboration between the contracting parties to encourage contract performance. Thus, beyond the contractual relationship between the parties, the obligation of good faith allows for a genuine collaborative relationship, a partnership, even, between the parties. A party being a victim of its contracting party’s actions, which are not in accordance with its obligation of good faith under the terms of the contract or which are implicitly derived from those terms, may be in a favourable position to claim damages. Thus, if a party experiences difficulties in performing its obligations because of an event beyond its control, it is entitled to expect the other contracting party to show good faith in the performance of the contract and to act reasonably. Abuse of rights  A party’s exercise of its contractual rights may, in certain situations, constitute an abuse of rights. For example, a party that is in default of its payment obligations under the contract, due to the closure of its business as required by government authorities, may trigger the application of a contract default clause by the other party. Such other partycould proceed with the immediate resiliation of the contract upon simply providing notice. While the terms of the contract may be clear, the other party’s haste in resiliating the contract may constitute an abuse of rights. Indeed, the nature of the relationship between the parties, the duration of the business relationship and the facts that led to the default have an impact on the way a party may exercise its rights under the contract. The exercise of rights provided for in the contract in such a way as to create devastating or catastrophic effects for one of the contracting parties could constitute an abuse of rights in the performance of the contract. Mediation The contract may provide for dispute resolution processes such as mediation or arbitration. To the extent that a dispute arises between the contracting parties and that the contract provides for recourse to alternative dispute resolution mechanisms, it will be possible or even mandatory to submit the dispute to a process such as mediation before a third party, which will attempt to help the parties find an acceptable common ground. In the event of non-performance by a contractual party, this may be a very good option, insofar as the contract contains a provision providing for recourse to such mechanisms, of course. How can a temporary agreement be negotiated, and are there elements that can be put forward as part of the discussions? Given the exceptional current situation, it may also be appropriate for the contractual parties to communicate and verify the impacts of the pandemic on the contractual performance. In this way, the parties may jointly conclude that there are particular difficulties in performing certain obligations under the contract. In such a case, propose solutions or present scenarios that aim to minimize the negative impacts for your respective businesses. Rely on the mutual aid factor to meet certain obligations and/or suspend others (performance, manufacture, delivery, time limits, forbearance, etc.). It is possible to suggest performing certain obligations in consideration for the performance of your contracting partner’s correlative obligations. Where feasible, consider partial payments, deferred payments, staggered payments over time or a reimbursement based on a percentage of revenues or sales once operations resume after the pandemic. If it is possible, offer additional guarantees to the other contracting party (e.g. collateral security, personal suretyship, third party guarantee). Validate whether your insurance covers the cessation of your operations, business interruption, delays in the performance of your obligations, or financial losses arising from some of your contracts, to enable you to propose viable alternatives.  Determine which suppliers or partners are willing to conclude a temporary arrangement and those who refuse or are less open to it. You can then to try to optimize your agreements with the more conciliatory partners, allowing you to continue performing certain obligations with your more reluctant contracting parties. Innovate! Think about alternatives that might not have been possible, or that you might not have considered before the pandemic, that allow you to optimize your business practices or relationships. In short, think outside the box. A few thoughts before undertaking a negotiation  Do not restrict your thinking to the period of restriction on non-essential activities which is, at the time of writing, until May 4, 2020.  Think instead about the weeks and months that will be required to re-establish your business relationships and resume normal business operations, while performing your ongoing obligations and any deferrals negotiated during the pandemic; The inability to adapt, or the maintenance of a hard line, will bring some businesses to the brink and force them to consider various insolvency processes. You must be in a position to show your contracting parties why a position that is too firm or inflexible will not, in the long term, be satisfactory or serve the parties’ interests, in addition to being detrimental to those parties who are likely to require flexibility in the performance of their contractual obligations. You need to be able to identify the considerations specific to your business and business model, and determine the elements that may influence your decisions, such as the nature of the relationship with the other contracting party, particularly if it is a long-standing customer or supplier, whether it is a relationship that will continue into the future or if it is a one-time contract that is non-recurring, and what impacts and reputational risk your actions may entail. Beyond legal principles, the long-term business relationship must be prioritized and protected. This argument should not be underestimated. The objective of most Quebec businesses is to find satisfactory common ground for the parties involved, while trying to minimize the impacts on both sides. The watchword the parties should keep in mind is “flexibility.” During these times when solidarity is in order, it seems to us that it would be wise for each party to make the effort to reach a duly negotiated temporary agreement. We are sharing these options to provide you with ideas on how to approach the negotiation of ongoing contracts, knowing that each contract, relationship and situation are  unique. For more information, our corporate law team remains at your disposal to accompany you during the pandemic. #WeWillGetThroughThis   Section 1470 para. 2 C.C.Q. Didier Luelles, La bonne foi dans l'exécution des contrats et la problématique des sanctions, Canadian Bar Review, Vol. 83, 2004, pp. 189-190.

On March 30, 2020, the Government of Canada announced that it would grant the Canada Emergency Wage Subsidy (the “CEWS”) to qualifying entities, no matter their number of employees or their size. Bill C-14 bringing into effect the CEWS, received royal assent on April 11, 2020.  The Government of Canada will subsidize 75% of the first $58,700 of each employee’s wages, for a maximum amount of $847 per week. This measure is retroactive to March 15, 2020. For now, the CEWS covers a 12-week period from March 15, 2020, to June 6, 2020, inclusive. The Canada Emergency Wage Subsidy does not abolish the Temporary Wage Subsidy for Employers, but entities that receive it for a given period will see the CEWS reduced. For more information on the Temporary Wage Subsidy for Employers, click here. Qualifying entities Pursuant to subsection 125.7(1) of the Income Tax Act1 (the “ITA”), to qualify for the CEWS, an entity must first be an “eligible entity.” Eligible entities are the following: Taxable corporations; Individuals; Registered charities (other than a public institution); Partnerships whose members are eligible entities; Agricultural organizations, boards of trade or chambers of commerce2; Non-profit corporations for scientific research and experimental development3; Labour organizations4; and Non-profit organizations5. Subsidies of foreign corporations are also eligible for the CEWS under the same conditions, provided they are incorporated under the laws of Canada. Excluded entities Public institutions6, such as municipalities and local administrations, crown-controlled corporations, public universities, colleges, schools and hospitals, are not eligible for the CEWS. As such, a partnership of which a member is an excluded entity, such as a crown-controlled corporation, would not be eligible for the Canada Emergency Wage Subsidy. Eligibility criteria To qualify for the CEWS, eligible entities will have until October 2020 to file an application for the qualifying periods. Filing will take place via a specific application process. Additionally, a person who has the principal responsibility for the eligible entity’s finances will have to attest that the Canada Emergency Wage Subsidy application is complete and accurate in all material respects. In order to qualify for the CEWS, an eligible entity should also have had a business number before March 15, 2020, for source deductions7 purposes. An eligible entity will need to demonstrate a drop in revenue of at least 15% for the qualifying period of March 2020 and of 30% for each subsequent qualifying period. Qualifying periods and reference periods for eligibility Eligible entities must use one of two methods to attest to the drop in revenue. Eligible entities must compare a current qualifying period to a past qualifying period via either: A year-to-year method (e.g., March 2020 compared to March 2019); or The average of its revenue earned in January and February 2020. An election will need to be made between these two methods in the entity’s first CEWS application. Eligible entities will have to use the same method for the whole duration of the program. Here is the list of the qualifying periods and the corresponding reference periods as announced on the Canada Revenue Agency’s website8: Claiming period Reference period for eligibility Period 1 March 15 – April 11 (reduction of 15%) March 2020 over: March 2019; or Average of January and February 2020. Period 2 April 12 - May 9 (reduction of 30%) April 2020 over: April 2019; or Average of January and February 2020. Period 3 May 10 – June 6 (reduction of 30%) May 2020 over: May 2019; or Average of January and February 2020.   The law provides that additional qualifying (and reference) periods could be added via regulation until September 30, 2020. Accounting method The eligible entity’s normal accounting method should be used to determine qualifying revenue. Entities can calculate their revenue according to either the accrual method or cash method but not a combination of both. Entities must choose an accounting method when filing their first CEWS application and will have to use the same method for the whole duration of the program. The legislation defines qualifying revenue, for the purposes of the comparison between the prior reference period and the current reference period, as “the inflow of cash, receivables or other consideration arising in the course of the ordinary activities of the eligible entity — generally from the sale of goods, the rendering of services and the use by others of resources of the eligible entity — in Canada in the particular period”9. Revenue must be gained from business conducted in Canada and arise from arm’s length sources. Extraordinary items and sums obtained or derived from a non-arm’s length person or partnership are excluded from the computation of revenue. Non-resident entities are not eligible for the CEWS unless they are taxable in Canada. Revenue from sales or transfers between non-arm’s length persons are excluded. An exception to this principle may apply to certain holding corporations. The amount of the Canada Emergency Wage Subsidy received for a qualifying period is not included in the calculation of eligible revenue for the subsequent qualifying period, of course. However, amounts received pursuant to the CEWS will reduce other incentives under tax legislation, like the SR&ED tax incentive program. Registered charities and non-profit organizations For registered charities, non-profit organizations, labour organizations, non-profit organizations for scientific research and experimental development, agricultural organizations, board of trades and chambers of commerce, the computation of revenue must include amounts received during its normal activities, which includes gifts and membership fees. These entities will be authorized to choose whether or not to include funds received from government. Once chosen, an accounting method must be applied for the whole duration of the program. Computation of qualifying revenue The calculation of qualifying revenue should normally be done entity by entity. Consolidated financial statements However, for an entity that is a part of a group of eligible entities that normally prepare consolidated financial statements, each member of this group may determine its qualifying revenue separately if it normally does so. Also, each entity of an affiliated group can make an election to establish its qualifying revenue on an individual basis. For such an election to be valid, every entity of the affiliated group must elect to establish its revenue on an individual basis. Joint ventures The ITA allows for a flow-through mechanism for participants of a joint venture qualifying as an eligible entity even if this joint venture is otherwise considered distinct from its members: If all of the interests in an eligible entity are owned by participants in a joint venture and all or substantially all (meaning 90% or more) of the qualifying revenue of the eligible entity for a qualifying period is in respect of the joint venture, then the eligible entity may use the qualifying revenues of the joint venture. Holding companies A joint election may also be filed in cases where all or substantially all (meaning 90% or more) of an eligible entity’s revenue arises from one or several non-arm’s length persons or partnerships. This mechanism is mainly aimed at holding companies providing services to other entities in a related group and whose revenue should otherwise be excluded pursuant to the “non-arm’s length source” criterion. A formula is provided for in the ITA, containing several presumptions in order to consider transactions with Canadian and foreign entities. Deeming provision for subsequent reference period Qualifying entities must file a new application for each qualifying period. The Canada Emergency Wage Subsidy will be paid monthly by cheque or direct deposit. A deeming rule is provided for in the ITA. When an eligible entity meets the qualifying revenue criteria for a qualifying period, a provision found in subsection 127(9) of the ITA deems the eligible entity to have met the qualifying revenue criteria for the immediately following qualifying periods. In other words, if for the qualifying period of March 15 to April 11, 2020, the entity has demonstrated and attested to a reduction of 30% of its revenue, the entity will be deemed to satisfy this condition for the next qualifying period of April 12 to May 9, 2020. Eligible employees Pursuant to subsection 127(1) of the ITA, an eligible employee is an individual who has been employed in Canada by an eligible entity during a qualifying period and who has not been without remuneration for a period of fourteen (14) or more consecutive days during this qualifying period. Eligible remuneration Eligible remuneration for the purposes of the CEWS includes wages, salaries and other remuneration10. In addition, professional fees, commissions and other amounts for services provided are eligible11. The following forms of remuneration are excluded: Retirement allowances; Amounts deemed to have been received by the eligible employee as a benefit under or because of a stock-option plan12; Any amount received that can reasonably be expected to be paid or returned, directly or indirectly, in any manner whatever, to the eligible entity, a person or partnership not dealing at arm’s length with the eligible entity, or another person or partnership at the direction of the eligible entity; and Any amount paid in respect of a week in the qualifying period, if, as part of an arrangement involving the eligible employee and the eligible entity, the amount is in excess of the eligible employee’s baseline remuneration, after the qualifying period, the eligible employee is reasonably expected to be paid a lower weekly amount than their baseline remuneration, and one of the main purposes for the arrangement is to increase the amount of the CEWS. As such, any arrangement to improperly benefit from the CEWS will be excluded from eligible remuneration. For the purposes of the Canada Emergency Wage Subsidy, eligible remuneration is computed using the average weekly remuneration paid to an eligible employee between January 1 and March 15, 2020, inclusively (the “baseline remuneration”). An exclusion is provided for any period of seven (7) days during which the eligible employee has not received any remuneration. There is no limit to the total amount of CEWS that an entity might claim. The CEWS applies to the first $58,700 of annual salary paid to each eligible employee, computed employee by employee. Under subsection 125.7(2) of the ITA, the CEWS is equal to the greater of the following amounts: 100% of remuneration paid, up to the lesser of the following amounts: 75% of the average weekly remuneration that the employee received before March 15, 2020; and 75% of weekly remuneration paid, up to $847 per week. Employees not dealing at arm’s length with the eligible entity If an eligible employee is not dealing at arm’s length with the eligible entity and he or she has not received eligible remuneration before March 15, 2020, he or she will not be eligible for the CEWS. Only 75% of the remuneration paid before March 15, 2020 will be eligible. This is aimed at preventing persons not dealing at arm’s length from increasing their salaries after March 15, 2020 to increase the amount of the CEWS they would be eligible to received. Example of a CEWS application Baseline weekly remuneration between January 1 and March 15, 2020 = $60,000 Average remuneration after March 15, 2020 = $60,000 % of remuneration paid % before March 15 Greater of: (A) 100% (B) 75% (C) 75% (A) up to the lesser of (C) and $847 (B) up to $847 Week applied for : 03/13-03/21 $1,153.85 $865.38 $865.38 $847 Week applied for : 03/22-03/28 $1,153.85 $865.38 $865.38 $847 Week applied for : 03/29-04/04 $1,153.85 $865.38 $865.38 $847 Week applied for : 04/05-04/11 $1,153.85 $865.38 $865.38 $847 Total CEWS for the eligible employee $3,388   The CEWS is equal to 73.40 % of remuneration paid. The net cost for the eligible entity is 26.60% (+ payroll contributions except if the employee is on leave without pay). Reduction in wages after March 15 If the baseline remuneration of the eligible employee was $60,000 prior to March 15, 2020 but, by agreement, the salary after March 15, 2020 is reduced to $40,000, the CEWS would then be $769, 23. In this example, the CEWS is equal to 100% of the remuneration paid after March 15, 2020 with a net cost to the eligible entity of $0. % of remuneration paid % before March 15 Greater of: (A) 100% (B) 75% (C) 75% (A) up to the lesser of (C) and $847 (B) up to $847 Week applied for: 03/13-03/21 $769.23 $576.92 $865.38 $769.23 Week applied for: 03/22-03/28 $769.23 $576.92 $865.38 $769.23 Week applied for: 03/29-04/04 $769.23 $576.92 $854.38 $769.23 Week applied for: 04/05-04/11 $769.23 $576.92 $854.38 $769.23 Total CEWS for the eligible employee $3,076,92   New Employee Should the eligible entity hire a new employee for a salary of $40,000 per year, the CEWS received in respect of this employee would be equal to $576.92 (75% of remuneration paid). Payroll contributions reimbursed under certain circumstances Certain employer-paid contributions can be reimbursed. This reimbursement would apply to the entirety of employer-paid contributions in respect of eligible employees, for each week during which these employees are on leave with pay and for which the entity qualifies for the CEWS regarding these employees. These contributions include: Employment Insurance; The Canada Pension Plan; The Québec Pension Plan; and The Québec Parental Insurance Plan. Eligible entities should continue to withhold and remit both employee and employer contributions as usual. They will then be able to claim a reimbursement at the same time as the CEWS. The Government of Canada has announced that entities benefiting from the CEWS will have to demonstrate having “done their best” to pay the remaining 25% of wages not covered by the CEWS to their employees. This criterion will be evaluated with flexibility in order to take into account the financial struggles of businesses. As of now, nothing with respect to this 25% is mentioned in the ITA. The CEWS will be deemed as taxable income for the entities benefiting from the program. Employees benefiting from the CEWS will be taxed at the source. How to apply An online portal will be launched between two (2) to five (5) weeks from now, for eligible entities to file a claim for the CEWS. Qualifying entities will be able to apply for the CEWS through the Canada Revenue Agency's My Business Account portal. The Minister of Finance will be able to communicate the name of any person or partnership that applies for the CEWS. More information should be released shortly. Anti-avoidance and penalties Specific anti-avoidance rules are provided for by the legislation. Also, in case of ineligibility, an employer must reimburse the amounts received. In case of abuse of the program, a penalty of up to 25% of amounts received could be imposed (up to 225% when computing all penalties that could be applied under the ITA), with the possibility of a prison sentence of up to 5 years. Eligible employees and interaction of the CEWS with the Canada Emergency Response Benefit The Government of Canada is considering putting in place a process allowing employees rehired by their employers during the same qualifying period to cancel their application for the Canada Emergency Response Benefit and to reimburse any amounts received pursuant to this program. Lavery’s team is available to answer any question you may have regarding the announced emergency measures as well as any related aspects. The information and commentaries contained in the present document do not constitute a legal opinion. Their sole purpose is to allow readers, who bear all responsibility, to use them for their own ends. The information and commentaries contained in this document are limited to the measures announced or made public by the Government of Québec and the Government of Canada on or before April 13, 2020.   R.S.C. (1985), c. 1 (5th Suppl.) As defined in paragraph 149(1)(e) of the ITA As defined in paragraph 149(1)(j) of the ITA As defined in paragraph 149(1)(k) of the ITA As defined in paragraph 149(1)(l) of the ITA As defined by paragraphs 149(1)(a) to 149(1)(d.6) of the ITA Under section 153 of the ITA Source: https://www.canada.ca/en/department-finance/news/2020/04/the-canada-emergency-wage-subsidy.html [to date as of April 13, 2020] Definition of “Qualifying revenue” in section 125.7 of the ITA Under paragraph 153(1)a) of the ITA Under paragraph 153(1)g) of the ITA Under paragraphs 7(1)(a) to (d.1) of the ITA

Two weeks ago, we published an article on the challenge of retaining your workforce amidst the pandemic. Since that time, two new programs on the subject have been announced by the provincial government. The first is meant to respond to the effects of the Canada Emergency Response Benefit (CERB) on employee retention, while the second promotes worker training. Incentive Program to Retain Essential Workers (IPREW) Although the CERB has been generally well received, it has led to difficulties for certain businesses that provide essential services. This is because the salaries of many workers (particularly those working part-time and those working as cashiers, delivery persons, security guards and maintenance workers) is lower than the CERB. In some cases, employees who were laid off and later recalled to work on a part-time basis felt penalized (unlike the regular Employment Insurance program, the CERB does not allow beneficiaries to keep part of the wages they receive by working). This disadvantage has led to surging rates of absenteeism. To incentivize essential services workers to remain in their posts, the IPREW provides a taxable bonus of $100 per week up to a maximum of $1,600 over the course of the program. This bonus is retroactive to March 15, 2020. The government estimates that 600,000 workers will be able to benefit from the program. Workers must submit their applications online beginning on May 19, 2020. The first payment is scheduled for May 27, 2020. To be eligible for the IPREW, workers must: Be working part-time or full-time in an essential service; Be over 15 years of age and living in Quebec; Earn $550 or less per week for an annual income of no less than $5,000 and no more than $28,600 for the year 2020; and Not be receiving CERB or PATT benefits. Workers whose employers receive financial aid from the federal government are still eligible. Non-essential businesses may want to consider implementing incentives inspired by the IPREW in order to retain their workforce when they are recalled to work following the gradual return to normal activities scheduled to begin on May 4, 2020. Non-essential businesses will most likely face problems similar to those that led to the creation of the IPREW, most notably because the CERB will be available until October 3, 2020. Concerted Action Program to Maintain Employment (PACME) It is reasonable to assume that companies resuming their operations after the province-wide shutdown will need to adopt many new measures, particularly in terms of workers’ health and safety and, as we wrote about last week, telework. Training workers will become even more relevant and essential. The PACME offers an opportunity to be proactive in that regard. PACME offers funding to employers seeking to promote training and best practices, with a special focus on human resource management during the crisis and in preparation for the reopening of the economy. It also aligns well with the federal wage subsidy program. The PACME is available to businesses whose operations have been reduced, suspended, increased or diversified by the crisis, as well as self-employed workers and organizational partners. To learn more about the PACME, please see the article published by our colleagues on the subject. Our Labour and Employment team is available to advise and accompany you throughout the crisis and the reopening process.

Most companies have seen their business operations seriously affected by the COVID-19 pandemic and the various government measures taken to mitigate its impact on the population. Companies have to contend with various issues in the short, medium and long term, such as the closure of many companies’, clients’ and suppliers’ places of business, restricted opening hours, and working from home. Businesses need to maintain the relationship of trust they have built with their lender a business partner with whom it pays to be proactive, show transparency and uphold best practices during these difficult times. Although each situation requires an individual analysis, it is in the borrower’s best interest to draw up an accurate picture of the company’s situation for the lender. The information that should be shared with the lender includes: A description of the plan implemented for clients, suppliers and employees to mitigate the effects of COVID-19 and ensure that operations continue as efficiently as possible; A description of the plan implemented for employees to ensure their health and safety while working; Whether the company’s services and activities are considered essential; The availability and use of government programs developed for businesses and their employees; The possibility of allocating work to other places of business and other efforts to mitigate the impact; Short, medium and long term financial projections, it being understood that even though these projections may be difficult to establish in the circumstances, they will equip the borrower for discussions with its lender and will enable it to anticipate its credit facility drawdown requirements, including any need to increase them; Representations, warranties and covenants in credit agreements that could be compromised. This communication must be ongoing. Considering the fast evolution of the COVID-19 crisis and the proliferation of governmental and other measures, it is important to keep the lender informed as the company’s situation changes. The lender will obviously appreciate getting the most accurate picture of the company under the circumstances, which will allow it to assess the situation and develop customized solutions with the company. The relationship of trust between borrower and lender is, more than ever, an asset in these difficult times. It is proving to be a positive vector of stability for our companies, which will have to overcome the effects of COVID-19. The professionals of our Debt Financing and Banking team can assist borrowers in analyzing the credit agreements they have entered into with their lenders and in developing a communication strategy that is appropriate and effective in the circumstances.

Download your reference page of the financial aids put in place in Quebec and Canada The ongoing COVID-19 pandemic is forcing different levels of government to institute measures to reduce the burden on taxpayers and protect the economy. The following is a summary of the principal measures announced to date:  Measures with respect to tax deadlines in Québec and Canada; Measures relating to businesses; Measures with respect to employees and self-employed individuals; Measures pertaining to judicial and administrative time limits. Measures to ease tax deadlines in Quebec and Canada On March 18 and March 27, 2020, the Minister of Finance of Canada announced the extension of filing deadlines for certain income tax returns and of payment deadlines for certain amounts owing for individuals, trusts and corporations for federal income tax purposes. The Minister of Finance of Québec matched the federal deadline extensions for provincial income tax purposes on the same day. Individuals New deadlines (Quebec and Canada) Income tax return filing June 1, 2020 For individuals conducting unincorporated businesses (and their spouse or partner) the deadline is June 15, 2020. Payment of income taxes For any balance that would normally be due on March 18, 2020, the new payment date is extended to September 1, 2020 QPIP/QPP/HSF/RAMQ contributions For any balance that would normally be due on March 18, 2020, the new payment date is extended to September 1, 2020 (Quebec only) Instalment payments For any balance that would normally be due on March 18, 2020, the new payment date is extended to September 1, 2020   Trusts (other than specified investment flow-through trusts) New deadlines (Quebec and Canada) Income tax return filing May 1, 2020 Payment of income taxes For any balance that would normally be due on March 18, 2020, the new payment date is extended to September 1, 2020 QPIP/QPP/HSF/RAMQ contributions For any balance that would normally be due on March 18, 2020, the new payment date is extended to September 1, 2020 (Quebec only) Instalment payments For any balance that would normally be due on March 18, 2020, the new payment date is extended to September 1, 2020   Corporations New deadlines (Quebec and Canada) Income tax return filing New deadline for tax returns normally due before May 31 is June 1, 2020 Payment of income taxes For any balance that would normally be due on March 18, 2020, the new payment date is extended to September 1, 2020 Instalment payments For any balance that would normally be due on March 18, 2020, the new payment date is extended to September 1, 2020 Payment of QST/GST For payments of QST/GST normally due on March 31, April 30 and May 31, the new deadline is June 30, 2020. Source deductions No measure has been announced to date   Partnerships New deadlines (Quebec and Canada) Filing of Partnership Information Return T5013/TP-600-v May 1, 2020   Not-for-profit organizations and registered charities New deadlines (Canada only) Filing of Information Return T3010 December 31, 2020   Person making a payment to a non-resident New deadlines (Canada only) Filing of Statement of Amounts Paid or Credited to Non-Residents of Canada (NR4) May 1, 2020   Deadlines for payments of import and export fees have been extended to June 30, 2020. Deadlines regarding filings and payments of tax on lodging otherwise due before April 30, 2020 are postponed to July 31, 2020. Deferral of tax payments in many Québec municipalities Many Québec municipalities have decided to defer municipal tax payment deadlines in order to reduce the burden on taxpayers. Here are the new deadlines set by some of them: Municipalities New deadline for the next tax payment Montréal July 2, 2020 Lévis Interest on balances owing will be suspended until May 30, 2020 City of Québec Payments due on May 4, July 3 and September 3, 2020 are postponed until August 4, September 3 and November 3, 2020, respectively. Trois-Rivières September 8, 2020 Longueuil Payments due on April 6, June 6 and September 8, 2020 are postponed until May 6, July 6 and September 8, 2020, respectively. Gatineau Payments that were due on March 31 and June 30 are postponed until August 31, 2020 Sherbrooke Payments due on May 4, July 3 and September 3, 2020 are postponed until August 4, October 3 and December 3, 2020, respectively. Laval September 1, 2020 for the 1st and 2nd payments.   Measures concerning businesses In Québec Concerted temporary action program for businesses (PACTE) On March 20, 2020, the Government of Québec announced a temporary program administered by Investissement Québec aiming to facilitate access to credit for businesses in the form of a loan guarantee. Businesses that are already clients of Investissement Québec can communicate directly with their project director or account manager by email or by phone using the online directory. Businesses that are not clients of Investissement Québec and that wish to benefit from such a loan guarantee must first contact their financial institution, which will itself contact an Investissement Québec account manager. Any questions on a specific situation regarding this program should be directed to Investissement Québec’s client centre, reachable at 1 844-474-6367. Caisse de dépôt et placement du Québec’s 4 billions dollars fund The Caisse de dépôt et placement du Québec (CDPQ) announced, on March 30, 2020, the creation of a 4-billion-dollar fund to assist Québec businesses temporarily affected by COVID-19. This financing will take diverse forms, which are not yet specified. In order to qualify for this financing, businesses must: Have been profitable before the beginning of the COVID-19 crisis; Have promising growth perspectives in their sector; Seek a minimum financing of 5 million dollars or more. Businesses that want to apply for this financing may do so by filing an online form. Accelerated treatment and payment of certain tax credits The Government of Québec and Revenu Québec have put in place several administrative measures aiming to supplement businesses’ cash flow. These measures are further described below. Concerted Action to Maintain Employment Program (CAMEP) (New) On April 6, 2020, the Government of Québec announced a new subsidy program of 100 million dollars aimed at helping businesses impacted by COVID-19 pandemic by supporting workforce skills development. The CAMEP is a two-pronged measure: Business Component, which targets businesses by supporting the business’s own activities aiming to improve human resources management and workforce skills. This support will take the form of financing of online or in-person training activities (subject to regulation on physical distancing set by Public Health Authorities), through reimbursement of eligible expenditures. Collective Promoters Component which targets organizations that offer a collective approach to meet the training needs of businesses and the workforce. A Collective Promoter is a group of employers or workers able to create employment-related projects and who can supervise or ensure their implementation, such as sectoral labour committees, training mutual and recognized employers’ associations, legally constituted workers’ associations, etc. Eligibility criteria The following entities will be eligible to CAMEP: Employers; Self-employed workers (whether or not they are incorporated) employing other workers; Workers’ and employers’ associations; Professional groupings; Group of employers; Group of workers; Collective Promoters recognized by the Commission des partenaires du marché du travail for the Collective Promoters Component of CAMEP; Cooperatives; Economic social enterprises; and Not-for-profit organization and community organization. Eligible training activities The following types of training activities offered by an entity listed above will be eligible to CAMEP: Basic employee training; Francization; Digital-skill training; Continuing education on business activities, no matter if they are related or not to the actual position of the trainee; Training encouraged by a professional order; Training essential to the resumption of business activities; Training related to a strategic shift in business activities in the context of economic uncertainties caused by COVID-19 and aiming to maintain or diversify business’ activities; and Re-qualification training for workers. Eligible expenditures The following expenditures, engaged by an entity listed above in the course of an eligible training activity will be eligible to CAMEP: Salaries and wages of workers (excluding social benefits) for a maximum of $25 per hour; Professional fees of consultants or trainer for a maximum of $125 per hour; Indirect fees for trainers (meals, transportation, accommodations, etc.) at real cost; Indirect fees for workers in training (transportation, meals, accommodations, etc.) at real cost; Elaborating, adapting or purchasing of training material, at real cost; Adapting of an in-person training course into an online training course; Registration or subscription fees of an online platform, at real cost; If applicable, fees related to management activities (banking fees, training material) paid by the delegated entity up to 10 % of those fees; Diagnostic of the human resources functions and, if applicable, of other management functions (Business Component only); Consultant fees in human resources management (organizational communication, telecommuting, etc.) (Business Component only); and Coaching and management training (Business only). Eligible expenditures, subject to certain exceptions regarding salaries and wages that will be explained further in this section, will give rise to a reimbursement of: 100 % of eligible expenditures on the first $100,000 or less; 50 % of eligible expenditures between $100,000 and $500,000. Reimbursement of salaries and wages: interaction between CAMEP and other wage-based subsidies granted by the Government of Québec or Canada The reimbursement terms of salaries and wages as eligible expenditures vary depending on the other wage-based subsidies granted by the Government of Québec or Canada that a business receives. Terms announced as of April 6, 2020, are the following: 25 % of total salaries and wages of employees in training (up to a maximum of $25 per hour), if the business receives the Canada Emergency Wage Subsidy of 75 % described below; 90 % of total salaries and wages of employees in training, if the business receives the Temporary Wage Subsidy for Employers of 10 % described below; 100 $ of salaries and wages of employees in training if the business receives no wage-based subsidy from the Government of Québec or Canada. Duration of CAMEP Projects detailing eligible training activities must be submitted to Services Québec. Services Québec will accept new projects until September 30, 2020, or until the $100 million dollars envelope runs out. Eligible training activities are not subject to a minimum or maximum duration. Further details concerning this measure are expected to be announced within the next few days. Small and Medium Businesses Emergency Aid (Québec) (New) This program aims to relieve SMBs experiencing financial difficulties due to the present COVID-19 crisis through loans of up to $50,000.   Eligible Businesses Businesses operating in all sectors, including social economy enterprises, cooperatives, and nonprofit organizations conducting commercial activities are eligible under the following conditions: They are in business in Québec since at least one year; They are temporarily closed, on the brink of closing or showing warning signs of imminent closure; They are in a context of maintaining, consolidating or reviving their activities; They are able to demonstrate a direct link between their financial difficulties and the present COVID-19 crisis. Businesses under the protection of the Companies’ Creditors Arrangement Act (R.S.C., 1985, c. C-36) or of the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) are excluded from this program.   Eligible Financing Financing granted by this program aims to relieve businesses’ cashflow needs and is determined based on reasonable and documented expenses. Cashflow needs must be caused by either: Impossibility or substantial reduction of the capacity to deliver products (goods or services) or merchandise. Financing will take the form of a loan guarantee of up to $50,000   How to Apply Businesses wishing to benefit from this program must contact their Regional County Municipality (RCM), their municipality’s office or the organization in charge of administering their RCM’s Local Investment Funds. Flexibility towards loans granted by Local Investment Funds (Québec) (New) A 6-month moratorium on reimbursement (both capital and interests) of loans granted by Local Investment Funds. Interests accrued during this period will be capitalized. This measure is in addition to the previously announced moratoriums related to the investment policies of most Local Investment Funds. In Canada Canada Emergency Wage Subsidy (CEWS) (New) The Government of Canada announced, on March 30, that it will grant a temporary wage subsidy, the Canada Emergency Wage Subsidy (the “CEWS”), to eligible employers, no matter their size and number of employees. Bill C-14 adopting the CEWS has been sanctioned on April 11, 2020. The Government of Canada will subsidize the first 75% of pre-crisis wages or salaries of existing employees, to a maximum salary of $58,700, amounting to a maximum amount of $847 per week, per salary. This measure is retroactive to March 15, 2020. As of now, this measure covers a twelve-week period, from March 15, 2020, to June 6, 2020, inclusively. The CEWS does not abolish the Temporary Wage Subsidy described below. An eligible employer who received an amount via the Temporary Wage Subsidy will see the amount of his CEWS reduced accordingly. For more details concerning he CEWS as well as examples of calculation of CEWS amount, read our complete CEWS brief here.   Temporary Wage Subsidy for Employers Announced on March 18, 2020, the Temporary Wage Subsidy for Employers allows eligible employers (in respect to this specific measure, notwithstanding the status, or lack thereof, of eligibility to the CEWS described above), to reduce payments of source deductions of an amount equivalent to 10 % of remuneration paid between March 18 and June 20, 2020, for a maximum amount of $1,375 per eligible employee and a maximum total amount of $25,000 per eligible employer. Eligible employers are: Individuals (excluding trusts); Canadian-controlled private corporations (“CCPCs”) which taxable capital in Canada for the previous taxation ear (including associated corporations) is inferior to $15 million dollars; Registered charities; Not-for-profit organization; and Partnerships the members of which are eligible employers. Notably, this measure is a diminution of source deduction payments and does not incur any injection of cash in the eligible employer’s business: no check or electronic transfer will be paid to an employer in application of this measure. This measure does not allow to reduce payments of contributions to the Canadian Pensions Plan, Employment-Insurance premiums or payments due to Revenu Québec. Eligible employers are allowed to reduce payments of source deduction for the first payment period concerning remuneration paid from March 18 to June 20, 2020. Should the amounts of the subsidy for an eligible employer for the period exceed the amounts of source deduction due for the period, the eligible employer will be allowed to reduce payment of source deductions beyond the end of the period, after June 19, 2020. This measure does not alleviate employers’ obligations to remit income tax deduction (beyond the subsidy amount computed using the method described above), to contribute to the Canadian Pensions Plan and to pay Employment-Insurance premiums. The amount of this subsidy that will be deducted from an eligible employer’s source deduction will be included in the employer’s taxable income for the year. No registration or filing is needed to benefit from this measure. However, employers will have to keep supporting records, which include: the total remuneration paid between March 18, 2020, and June 20, 2020; the amount of federal, provincial and territorial income tax that was deduced from that remuneration; and the number of employees paid in the period. The Government of Canada announced that organizations that are not eligible to the CEWS described above may still be eligible to the Temporary Wage Subsidy for Employers. Amounts deducted from source deductions by virtue of this measure will diminish any amount due to an employer by virtue of the CEWS, thus eliminating duplication of benefits. Canada Emergency Commercial Rent Assistance (CECRA) The Government of Canada has announced its intention to introduce the CECRA in order to provide loans, including forgivable loans, to commercial property owners who in turn will lower or forgo the rent of SMBs for the months of April (retroactive), May and June, 2020. A partnership between the Government of Canada and the provincial governments will be necessary to administer this program, as regulation of owner-tenant relationships is a private law matter. Announcements detailing these measures should followin the coming days. Canada Emergency Business Account – Loan guarantee of $40,000 to SMBs (New) On March 27, 2020, the Government of Canada announced that SMBs and not-for-profit organizations will be able to take out a government-backed loan from private banks up to a maximum of $40,000. These loans will be interest-free for a year. To be eligible, businesses will have to demonstrate that they had a total payroll ranging between $50,000 and $1 million for 2019. The reimbursement of this loan before December 31, 2022, will incur a write-off of 25% of the debt, for a maximum write-off of $10,000. Easing of the cash reserve requirements for financial institutions ($300 billion of additional funds) (Canada) The Office of the Superintendent of Financial Institutions has relaxed the rules concerning the mandatory cash reserves of Canadian financial institutions. This measure will increase the loaning capacity of Canadian large banks up to $300 billion and will facilitate access to credit for borrowers. Co-Lending Program for Small and Medium-sized Enterprises The BDC and certain financial institutions will co-lend to SMBs in order to fund their operational expenses and cash-flow needs. The BDC will loan a maximum amount of $5 million per loan. Eligible financial institutions will be responsible for managing this program and will be the point of contact with clients. New Loan Guarantee for Small and Medium-sized Enterprises EDC will guarantee new operating credit and cash flow term loans that financial institutions extend to SMBs up to $6.25 million. Measures for employees and self-employed individuals In Québec Temporary Aid for Workers Program (PATT) The Government of Québec announced on April 8, 2020 that the PATT program will end as of April 10, 2020, due to the introduction, by the Government of Canada, of the Canada Emergency Response Benefit. Incentive Program to Retain Essential Workers (IPREW) The Government of Québec announced a new financial aid granted to essential workers during the period of the COVID-19 crisis, aimed at compensating differences between worker’s normal salary and the CERB. The IPREW consists of a payment of $100 per week, amounting to $400 per month, for a maximum duration of 16 weeks. The first IPREW payment is scheduled for May 27, 2020. All subsequent payments will take place every two (2) weeks. Workers eligible to IPREW are those who: Are working full or part-time in a sector related to essential services during the period; Earn a gross salary of $550 or less per week; Earn yearly employment revenues of at least $5,000 and at most $28,600 for the year 2020; Are aged of at least 15 years at the moment on which they claim benefits from IPREW; Are residents of Québec on December 31, 2019 and are planning to remain residents of Québec all through the 2020 year; Have not received, for a week on which they claim IPREW, benefits from CERB or PATT. IPREW claims can be filed from May 19, 2020 to November 15, 2020 through the My Account with Revenu Québec. Claimants must be registered to direct deposit with Revenu Québec in order to benefit from IPREW. Accelerated Treatment and Payment of Certain Tax Credits The Government of Québec and Revenu Québec have taken several administrative measures to supplement individuals’ financial situations. These measures are further described below. In Canada Buyback of Government of Canada Bonds The Bank of Canada has announced that it is expanding the scope of its Government of Canada bond buyback program to add liquidity to the market. Mortgage Default Management Tools The Canada Mortgage and Housing Corporation (CMHC) and other mortgage insurers have ways to assist homeowners experiencing financial difficulty. Among these are payment deferral, loan re-amortization, capitalization of outstanding interest arrears and other eligible expenses, and special payment arrangements. Canada Emergency Response Benefit (New) The Canada Emergency Response Benefit (CERB) announced on March 25, 2020, and sanctioned by Bill C-13, replaces the Emergency Care Benefit and the Emergency Support Benefit previously announced. The CERB is a taxable benefit of $2,000 per month for a maximum period of 4 months. The CERB was put in place in order to provide financial aid that is faster than the normal Employment Insurance program would be under the circumstances. It is therefore advised that workers eligible for both the CERB and Employment Insurance first file a CERB claim, even though the CERB is limited to a 4-month duration, because CERB claims will be processed faster than Employment Insurance claims. Bill C-13 provides that workers must meet the following criteria to be eligible for the CERB: Whether employed or self-employed, they have ceased working for reasons related to COVID-19 for at least 14 consecutive days within the four-week period in respect of which they are applying for the payment; and They are not receiving, in respect of the consecutive days on which they have ceased working: subject to the regulations, income from employment or self-employment, benefits, as defined in subsection 2(1) of the Employment Insurance Act, allowances, money or other benefits paid to the worker under a provincial plan because of pregnancy or in respect of the care by the worker of one or more of their newborn children or one or more children placed with them for the purpose of adoption, or any other income that is prescribed by regulation. For CERB purposes, a worker is any person aged 15 or more, who is a resident of Canada and who, for the 2019 calendar year or in the twelve (12) months preceding the date on which the worker files the CERB claim, earned at least $5,000 in income. The income must have come from one or several of the following sources: employment; self-employment; benefits paid under the Employment Insurance Act2; allowances, money or other benefits paid to the person under a provincial plan because of pregnancy or in respect of the care by the person of one or more of their newborn children or one or more children placed with them for the purpose of adoption. On April 15, 2020, the Government of Canada has announced that the CERB eligibility criteria will be broadened in order to: Allow persons to earn up to $1,000 per month during which they receive CERB; Extend CERB to seasonal workers who have exhausted their Employment-Insurance regular benefits and are unable to undertake their regular seasonal work as a result of the COVID-19 outbreak; Extend the CERB to workers who have recently exhausted their Employment-Insurance regular benefits and are unable to find a job or return to work because of COVID-19; Allow artists to receive royalty payments for copyrighted works produced before March 1st, 2020 while collecting CERB. Dividends A taxpayer who receives dividends may be eligible to CERB if the dividends paid are ordinary dividends (in general, ordinary dividends are paid from business revenues on which the Small business deduction applies). How to apply CERB claims are available since April 6, 2020. Payments are planned to start in the ten (10) days following the filing of a claim concerning any period starting and ending between March 15, 2020, and October 2, 2020. To file an application, click here. A single CERB claim must be filed with Service Canada. A reimbursement must be made if you have received CERB twice or if you return to work earlier than scheduled. It is to be noted that certain appeals concerning Employment Insurance and the Canada Pension Plan are suspended. Other measures (Québec and Canada) Many other measures will be put in place, including an increase in the Canada Child Benefit, an increase in the maximum GST credit, the reduction of the minimum withdrawal amount of RRIFs, an extension for reimbursement of student loans (both in Québec and in Canada) as well as several specific credits. Here are some of them: Autorité des Marchés Financiers (AMF): The AMF is granting an additional 45 days for the continuous disclosure filings of reporting issuers that were to be filed before June 1, 2020. For more details, click here. Canada Economic Development for Québec Regions (CEDQR): Starting April 1, CEDQR will defer payments due to CEDQR by its clients for a duration of three (3) months. For more information, click here. Export Development Canada (“EDC”): EDC will facilitate cash flow loans for exporting businesses by offering loan guarantees to their banks on loans of at most $5 million. Also, under certain conditions, EDC will cover losses on expedited goods even if the buyer has not accepted them. The cancellation of the 60-day waiting period for compensation claims was also announced. For more details, click here. Hydro-Québec: Since March 23, Hydro-Québec has suspended the application of management fees on outstanding bills for all clients. For more information, click here. Measures concerning judicial and administrative time limits Amongst the emergency measures announced, the authorities have also put in place measures to ensure the respect of the taxpayers’ rights, both in Québec and in Canada. In Québec Suspension of extinctive prescription in civil matters On March 15, 2020, through Order 2020-4251, the Minister of Justice of Québec and the Chief Justice of Québec suspended extinctive prescription and terms for forfeiture in civil matters until the health emergency declared by the Government of Québec on March 13, 2020, comes to an end. Proceedings in civil matters are also suspended during this period, with the exception of matters deemed urgent, such as injunctions and habeas corpus applications. This measure applies to, but is not limited to, the following: Appeals of assessment before the Court of Québec; Summary appeals before the small claims division of the Court of Québec; Application of review of the Minister’s decision refusing to extend the time limit for filing an objection; Request to extend the deadline to file an appeal or a summary appeal. Extension of various deadlines Several deadlines to exercise a right, provide information, send documents or make an election that would have applied before May 31, have been deferred to June 1, 2020. Failing to meet such a deadline can cause the loss of a right and generate a penalty or interest, depending on the nature of the obligation and the amount of time elapsed since the deadline. The deadline extension will cover, among other things, the following: Filing of an income tax return of a corporation; Election of a choice under legal or regulatory fiscal rules, such as a rollover; Claim of a tax credit; Claim of fuel tax reimbursement; Response to a request of information from Revenu Québec; Mandatory or preemptive disclosure with regard to aggressive tax planning; Claim of Québec Education Savings Incentive. Extension of time to file an objection to a notice of assessment For a notice of assessment subjected to a time limit for filing an objection ending between March 15 and June 29, 2020, the time limit is extended to June 30, 2020. However, notices of objection should still be filed within the required time limit (i.e., 90 days from the issuance of the notice of reassessment) provided for in section 93.1.1. of the Tax Administration Act, when possible. This is a mandatory deadline that cannot be amended. Therefore, unless otherwise indicated, a notice of objection filed after the 90-day period provided for in section 93.1.1. of the Tax Administration Act, should also include an application for an extension of time to file said notice of objection. Accelerated treatment and payment of certain tax credits For businesses: On March 27, 2020, the Government of Québec announced the advance payment of tax credits to businesses in order to inject cash in businesses as quickly as possible. This measure will allow for the advance payment of more than $600 million to businesses. For individuals: Revenu Québec has accelerated processing of income tax returns granting a payment by Revenu Québec. Since February 24, 2020, almost $800 million has been paid in advance to individuals having already filed their income tax return. The 4-month extension of the renewal of the tax credit for Home-Support Services for Seniors as well as the deferral of the renewal of the Shelter Allowance Program to December 1, 2020, are improving upon the socio-fiscal measures already in place in Québec. Suspension of audits and debt collection Revenu Québec has suspended its audit activities, except for situations presenting a risk of fraud. No contact with a taxpayer will be initiated by Revenu Québec unless it is necessary for processing a payment to the taxpayer. Revenu Québec has suspended its debt collection activities and will be flexible in the application of payment agreements regarding a fiscal debt. In Canada Suspension of audits (New) The Canada Revenue Agency has announced that no communications aiming to audit SMBs regarding the GST/HST or income tax will occur.   Also, no request for information concerning an ongoing audit will be sent to taxpayers. Ongoing audits will stop and no new assessments will be made. If you have received a communication from the Canada Revenue Agency containing response dates or deadlines to transmit a document, no action is required from you or your representative for the time being. Objections and appeals (New) Objections regarding the right to a benefit or a tax credit, such as the Investment Tax Credit (SR&ED), have been deemed to be essential services. No delay should affect processing of such objections. Objections concerning any other tax matter regarding individuals or businesses are suspended. On March 28, 2020, the Canada Revenue Agency announced that the deadline for any objection to a notice of assessment for which the deadline to file a notice of objection is after March 28, 2020, is deferred to June 30, 2020. However, notices of objection should still be filed within the required time limit (i.e., 90 days from the issuance of the notice of reassessment) provided for in section 165 of the Income Tax Act, when possible. This is a mandatory time limit that cannot be amended. Therefore, unless otherwise indicated, a notice of objection filed after the 90-day period provided for in section 165 of the Income Tax Act, should also include an application for an extension of the time to file said notice of objection. Suspension of debt collection (New) All debt collection activities on new amounts owing to the Canada Revenue Agency are now suspended. Existing debts that are already the subject of a collection measure will be re-evaluated on a case-by-case basis. Any taxpayer that cannot, before the payment deadline and for circumstances beyond its control, fulfill its obligations towards the Canada Revenue Agency, can file a Request for Taxpayer Relief in order to cancel interest or penalties that would be otherwise applicable. Administrative tax measures Administrative income tax actions required of a taxpayer by the Canada Revenue Agency that are due after March 18, 2020, can be deferred to June 1, 2020. Such actions include filing of an income tax return, elections and requests for information. Payments of source deductions and any related activities are expressly excluded from such deferrals. Suspension of Tax Court of Canada delays Appeals before the Tax Court of Canada are postponed due to the closing of the Tax Court until further notice. Conference calls scheduled between March 16 and May 29, 2020, are cancelled. The Tax Court’s calendar will be reassessed on May 20, 2020. However, notices of appeal should still be filed within the deadline provided for in section 169 of the Income Tax Act, when possible. The period ranging from March 16 to the 60th day after the eventual reopening of the Court and its offices will be excluded from the computation of time under: Tax Court of Canada Rules (General Procedure); all other Rules made under the Tax Court of Canada Act governing the conduct of matters that, pursuant to section 12 of the Tax Court of Canada Act, are under the  Tax Court of Canada’s jurisdiction; or an Order or Direction of the Tax Court of Canada. The Tax Court of Canada will process any applications of extensions of time to file Notices of Appeal filed during the period that the Court is closed and for 60 days thereafter as including an application for an extension of time to appeal brought on the exceptional grounds that the applicant was prevented by the crisis caused by the COVID-19 and the Court closure from filing within the normal statutory deadlines. Appeals to the Minister regarding the Canada Pension Plan and Employment Insurance Taxpayers who wish to file an appeal of the Minister’s decision regarding the Canada Pension Plan or Employment Insurance may do so by filing a request through My Account. As of now, the Canada Pension Plan and Employment Insurance appeals programs are only following up on cases in which benefits are suspended. All other appeals will pick back up when all services are back to normal. Lavery’s team is available to answer any question you may have regarding the announced emergency measures as well as any related aspects. The information and commentaries contained in the present document do not constitute a legal opinion. Their sole purpose is to allow readers, who bear all responsibility, to use them for their own ends. The information and commentaries contained in this document are limited to the measures announced or made public by the Government of Québec and the Government of Canada on or before April 20, 2020.   Normally, to be eligible for the small business deduction, a corporation must be a Canadian-controlled private corporation and its taxable capital (including that of its group of related corporations) must not exceed $15 million. Subsections 22(1), 23(1), 152.04(1) and 152.05(1) of the Employment Insurance Act.

Due to the ongoing pandemic and the resulting suspension of many company activities, certain employers are maintaining their operations by means of telework. Employers have had to swiftly redeploy their human resources to an extent that would have been unimaginable just a few weeks ago. The redeployment of resources now working from home was done in a time of crisis, without the benefit of advanced planning, training, and strategic evaluation that usually accompanies changes of this magnitude. With no prediction yet available on how long the current crisis will last, employers must take steps now to ensure that the measures implemented to promote the continuity of their operations do not result in negative consequences, disputes or claims from their employees, clients or partners. In Quebec, thousands of employees are currently using new technological tools in a new environment (their homes), often without supervision.  The boundary between private life and work has never been more blurred. The magnitude of the current context can artificially obscure the importance of employers adapting their operational methods and associated human resource policies to avoid the risks associated with working remotely. Employers must remember that legal action could be taken after the crisis to address any problematic situations in play now. It is important to act now in order to avoid exposure to significant liability in a post-Covid environment. To that end, we have identified the following four areas of concern. These have been highlighted so that employers can take any required measures to ensure that the telework performed is not only appropriate and safe, but also of sufficient quality to satisfy client and company needs: Concerns Related to Health and Safety while at Work The employer’s obligations in terms of health and safety and its responsibility to take preventive measures continue during this period of telework; The idea that the workplace can include the employee’s home must be taken into account, as well as associated workstation ergonomics Concerns Related to Psychological and Sexual Harassment The need to preserve civility while using new methods of communication; The feeling of familiarity engendered by these new methods of communication can be fertile ground for misconduct or a failure to engage in proper teamwork; The employer’s legal responsibility to prevent and address psychological and sexual harassment situations; Events that occur outside the usual workplace and are related to work; The application and adaptation of administrative policies and codes of conduct; Reviewing complaint and inquiry procedures so that they can take place outside of the usual workplace. Concerns related to the Act Respecting Labour Standards1 Respecting and modifying work schedules; Managing overtime; Costs associated with working from home; Concerns related to Privacy and Confidentiality The contractual performance of work in the employee's home; Transporting and storing work documents; Setting up a workspace to ensure that documents are kept confidential and ethical obligations are respected ; Our Labour and Employment team will be happy to help you implement best practices for telework.   Act respecting labour standards, chapter N-1.1.

With the ongoing COVID-19 pandemic, governments and agencies are implementing an increasing number of measures of all kinds. The state of emergency is giving rise to a multitude of legal concerns, in particular contractual ones. The temporary closure of many businesses, public places and borders and the resulting economic uncertainty is leading businesses to question their contractual obligations, which may have become difficult to meet. In such a context, can debtors fail to meet their obligations without being held liable? The answer to this question can be found either in the text of the contract binding the parties or in the Civil Code of Québec (hereinafter “C.C.Q.”). Many contracts do in fact provide for exemption mechanisms. They set out which of the parties will bear the risks associated with events beyond their control. In the absence of contractual provisions to that effect, the rules set out in the C.C.Q. apply. The Civil Code of Québec and superior force Article 1693 C.C.Q. provides that the debtor of an obligation is released from said obligation when it cannot be performed by reason of superior force. However, the burden of proof of superior force is on the debtor. In Quebec law, superior force is defined as an unforeseeable and irresistible event that is external to the party subject to the obligation. It makes the performance of an obligation impossible1. Thus, in certain circumstances, natural phenomena, such as earthquakes, floods and others, or human acts, such as a state of emergency declared by a government, illness or death, may be considered superior force. Determining whether an event in a particular context constitutes superior force must be done by taking into account all relevant factors. For an event to qualify as superior force, it must meet the following three conditions or criteria. It must be: Unforeseeable Irresistible Exterior An event is unforeseeable when the parties to a contract, acting as reasonably prudent and diligent persons, could not foresee it at the time that the contract was concluded. There is no need for the event to be a new phenomenon. For example, ice storms in Quebec are not unusual. In 1998, however, the ice storm led to an unforeseeable situation. The magnitude of the 1998 ice storm was such that it was sometimes described as superior force.  An event is irresistible when (i) any person placed in the same circumstances cannot reasonably avoid it and (ii) it makes the performance of an obligation impossible. Thus, if the performance of an obligation remains possible, but is simply more difficult, more perilous or more expensive, the event having caused the complication cannot be considered superior force. For an event to be considered exterior, the debtor must have no control over it and must not be responsible for causing it. The debtor must even be able to demonstrate that it has taken all reasonable steps to mitigate its consequences. On the basis of these criteria, the current state of emergency in Quebec may be deemed to be a situation of superior force for some debtors. The analysis must be made on a case-by-case basis and consider the specific obligations of each debtor. For example, the production stoppage ordered by the Government of Quebec, imposing the suspension of workplace activities other than priority activities as of March 25, 2020, makes it absolutely impossible for certain businesses to perform the obligations covered by this decree. For others, the state of emergency may have financial consequences, but these do not make their obligations impossible to perform. While the ongoing crisis can be considered an unforeseeable event for the purposes of a contract concluded years ago, this can hardly be the case for a contract concluded in the last few days, when the disease was already endemic or the pandemic had been announced by the health authorities. In the event of superior force, a debtor is released from the obligation(s) affected by the superior force2. Depending on the importance of these obligations, the release may, in certain cases, lead either to the termination of the contract in its entirety, or to the suspension of the performance of certain obligations. Thus, suspension should only occur when the obligations are to be performed successively and the impossibility of performance is only temporary. A debtor who is released from an obligation by reason of superior force may not demand consideration from the other contracting party3. Superior force cannot be used as a means of exemption for a debtor who is subject, under the terms of the contract, to an obligation qualified as an obligation “of warranty4”. The debtor must then perform the obligation and assume all risks related to the occurrence of an unforeseeable and irresistible event over which it has no control. A debtor faced with the current difficulties arising from the global COVID-19 pandemic must, in all cases, take steps to minimize the damage. For example, it must try to find new suppliers or subcontractors before claiming that it is unable to fulfil its obligations. Contracts may provide for different conditions Parties to a contract may include provisions in the contract governing the consequences of uncontrollable situations, such as superior force, and thus deviate from what is provided for in the C.C.Q. In practice, many contracts contain a broader or more restrictive definition of events that may constitute superior force. For example, strikes and fires will generally not be considered cases of superior force within the meaning of the C.C.Q., but may be under the terms of a contractual provision. Likewise, a party may, at the time that a contract is concluded, undertake to fulfil its obligations even if it is subject to a situation of superior force. In so doing, it waives the right to invoke such grounds for exemption in advance. The parties may also provide for steps to be taken in order to benefit from a contractual provision governing superior force, such as the sending of a notice within a stipulated time limit. The usual provision dealing with superior force requires the party invoking it to send a notice to the other party justifying its use of the provision. Failure to send such notice within the prescribed time limit may result in the affected party being barred from availing itself of the superior force provision. It is therefore particularly important for a party to pay close attention to the formalities and other requirements set out in the contract when invoking such a provision. A contract may additionally contain a provision that determines what effects the occurrence of an event considered as superior force will have. For example, the parties may agree that superior force will result in the termination, suspension or modification of an obligation, such as the proportional adjustment of a minimum volume to be delivered. Finally, the parties to a contract may set out the consequences of unforeseen and external situations that do not, strictly speaking, make the performance of an obligation impossible. For instance, the parties may anticipate the risk of an unexpected increase in the cost of an input by means of a hardship clause. A matter of sound foresight, such a clause may have significant consequences in the current situation, even if it does not specifically address superior force. Conclusion A superior force situation and the exercise of the rights that may result from it must be analyzed with the following in mind: A case-by-case analysis is required for each situation. Other legal concepts may apply depending on the circumstances, such as the duty of good faith of the parties to a contract, the duty to minimize damage, and the duty to demonstrate the absence of an alternative. Business risks or reputation risks may apply to both the party wishing to invoke superior force and the party against whom it is invoked. A review of the terms and conditions of the parties’ insurance policies, which may provide compensation for financial losses, may also be appropriate.   Article 1470 C.C.Q. Article 1693 C.C.Q. Article 1694 C.C.Q. This is opposed to obligations qualified as “of result” or “of means,” for which the debtor may be released by reason of superior force.

The Ontario Superior Court of Justice refuses to suspend a father’s access rights to his child and specifies the criteria for determining the urgency to intervene in family matters  The global crisis we are going through brings its share of challenges and worries, including the protection of our loved ones. Several parents wonder about the protective measures to be taken and the advisability of maintaining the arrangements for shared custody or access with the non-custodial parent. Should these modalities be maintained despite the present crisis or, on the contrary, should they be suspended because of the social distancing requirements? The Ontario Superior Court of Justice rendered the first published Canadian judgment which sheds light on these important issues and bring guidance not only to Ontarian parents and lawyers but to those across the country, including in Quebec. Moreover, a judgment rendered recently in Quebec puts forward the principles established in the Ontario judgement. In Ribeiro v Wright1, the Ontario Superior Court of Justice was seized of an urgent motion brought by the Mother of a 9-year-old boy to suspend all in-person access with his father because of COVID-19. The mother was concerned that the father would not maintain social distancing for the child during periods of access while she and her family were practicing social isolation in their home for the duration of the COVID-19 crisis. She did not want her son leaving her house for any reason, including seeing his father. In his judgment of March 23, 2020, Justice A. Pazaratz of the Ontario Superior Court of Justice did not authorize this matter to proceed on an urgent basis but explained his reasons in detail. First of all, the Court insisted that the health, safety and well-being of children and families remained its foremost consideration during the COVID-19 crisis which is an extremely difficult and stressful period for everyone. Orders should be respected and complied with In the above-mentioned case, the Court stressed that there was an existing custody and access judgment. Justice Pazaratz insisted that there is a presumption that all judgments should be respected and complied with even during the COVID-19 crisis and that an existing judgment granting custody or access rights to parents reflects a determination that meaningful personal contact with both parents is in the child’s best interest. As a general rule, existing parenting arrangements and schedules should continue, subject to whatever modifications may be necessary to ensure that all COVID-19 precautions are adhered to, including strict social distancing.  The Court indicated that in “many respects we are going to have to put our lives “on hold” until COVID-19 is resolved. But children’s lives – and vitally important family relationships – cannot be placed “on hold” indefinitely without risking serious emotional harm and upset”. In the Court’s opinion, a general policy that children should never leave their primary residence, even to visit their other parent, would be inconsistent with a comprehensive analysis of the best interests of the child. In some cases, parents may have to forego temporarily their time with their child, for example in the following cases:  When a parent is under self-isolation for a 14-day period as a result of recent travel; Because of personal illness or exposure to illness; Because of a parent’s personal risk factors (for example through employment); The Court insisted, however, that there would be zero tolerance for any parent who recklessly exposes a child (or members of the child’s household) to any COVID-19 risk, such as failure to comply with social distancing or to take reasonable health precautions. Justice Pazaratz acknowledged that each family will have its own unique issues and complications, that temporary changes may be required and that there will be no easy answers but “no matter how difficult the challenge, for the sake of the child we have to find ways to maintain important parental relationships – and above all, we have to find ways to do it safely.” Justice Pazaratz called upon the parents to act responsibly and try to attempt some simple problem-solving before they initiate urgent court proceedings. The Court mentioned that despite extremely limited resources during this crisis, it would always prioritize cases involving children. If parents have concerns that COVID-19 creates an urgent issue in relation to custody and access arrangement, they may initiate an emergency motion but should not presume that the existence of the COVID-19 crisis will automatically result in a suspension of access or custody time nor that it will necessarily result in an urgent hearing. The Court indicates that it will deal with COVID-19 custody and access issues on a case-by-case basis according to the following test which will be used to determine whether it is urgent for the Court to intervene:  The parent initiating an urgent motion on this topic will be required to provide specific evidence or examples of behavior or plans by the other parent which are inconsistent with COVID-19 protocols; The parent responding to such an urgent motion will be required to provide specific and absolute reassurance that COVID-19 safety measures will be meticulously adhered to – including social distancing, use of disinfectants, compliance with public safety directives, etc.; Both parents will be required to provide very specific and realistic time-sharing proposals which fully address all COVID-19 considerations, in a child-focused manner; Judges will likely take judicial notice of the fact that social distancing is now becoming both commonplace and accepted, given the number of public facilities which have now been closed. This is a very good time for both custodial and access parents to spend time with their child at home. Justice Pazaratz dismissed the mother’s urgent motion as he was not satisfied that she had established a failure, inability or refusal by the father to adhere to appropriate COVID-19 protocols in the future. The judge concluded that “none of us have ever experienced anything like this. We are all going to have to try a bit harder – for the sake of our children.” The Superior Court of Quebec confirms that as a general rule the status quo must be maintained The judgment Droit de la famille - 204742 rendered on March 27, 2020, the Superior Court of Quebec applied essentially the same principles as those set out in the above-mentioned Ontario decision, namely that :  The existing custody or access orders are maintained allowing the child to benefit from the presence of both parents; A parent wishing to suspend existing orders must establish: the urgency of his request; sufficient grounds; A parent's living environment that threatens the health or safety of the children, or presents symptoms of the disease, may constitute sufficient grounds; Both parents must comply with the health and safety directives; This decision indicates that for the Superior Court of Quebec, as for the Superior Court of Ontario, existing judgments on custody and access must be maintained, except when there is a concrete risk to the child’s health because of one of the parents’ behaviour or living environment, which may give an opening to a modification. Parental authority to be exercised jointly by both parents Furthermore, it is worth noting that in Quebec parental authority allows parents to jointly take decisions relating to their child even when they no longer live together, except in the rare cases where a parent is deprived of this right by a judgment of the court. Thus, regardless of the applicable custody arrangement, both parents must consult each other on any matter of importance relating to the child, in particular with regards to his health. Before making an important decision regarding the health of a child, a parent should consult with the other parent and discuss the best options under the circumstances. Professionals to help you see more clearly In summary, we are living in an exceptional situation that requires flexibility and understanding on the part of each parent while complying with the directives issued with respect to COVID-19. If you have any doubts or concerns about your child's situation, or if your discussions with the other parent prove fruitless, it may be helpful to consult with professionals to determine the best course of action in the circumstances. Our Family, Personal and Estate Law team remains available and fully functional to assist you, advise you and take the legal steps required in the best interest of your child.   2020 ONSC 1829, available online: http://canlii.ca/t/j60jj. 2020 QCCS 1051.

In order to best support our clients and business partners, our team is following developments related to COVID-19 very closely. We invite you to visit on our website the page that centralizes all of the tools and information produced by our professionals. There is a concern that simply laying off employees could lead to companies experiencing a major loss of expertise and skill. This expertise will be essential to rebuilding after the end of the crisis, a time that for many will be the greatest challenge in the history of their organization. Organizations recognize that employees have value over and above their skills. They have acquired an in-depth understanding of the company’s goals and operations. They have established a relationship of trust with the company, a network of contacts, and a certain degree of autonomy, to name only a few examples. These make all the difference. We are working with many employers to identify solutions designed to protect this invaluable asset during this unprecedented crisis. The latest government announcements, which include provisions for increased wage subsidies for some companies, are certainly a positive response to current concerns and realities. Other programs with solutions that might be of interest include: New Flexibility in the Federal Work-Sharing Program The federal government has recently established measures to increase the flexibility of the Work-Sharing program (“WS”), which has been the subject of many questions from both employers and employees. Considering the frequent changes made to various government programs, it is possible that by the time you read this, some information may no longer be up to date. We therefore invite you to visit the Employment and Social Development Canada1 (“ESDC”) website or consult our labour and employment law professionals for more information. What is the Work-Sharing program (“WS”)? The goal of the program is to allow employers to keep all of their workers by reducing hours rather than laying off part of their workforce. This program may be a good option for employers who are facing a decrease in their normal level of operations due to COVID-19, but who still have some work for their employees in a reduced capacity.  During the program’s implementation period, available work is redistributed equally among employees in one or more work units.  The employer submits an application and fills out the form outlining the agreement between the employer, the affected employees and their representative, through which the employees voluntarily accept a reduction in their work hours and the sharing of available work. In order to compensate for this reduction in income, the program allows workers who are part of the agreement to receive employment insurance benefits. Under the Employment Insurance Regulations2, remuneration received for a given week of work-sharing is not deducted from the benefits payable under the Employment Insurance Act3. For companies that are directly or indirectly affected by the decline in business due to the current situation, the program’s duration is a minimum of six weeks and a maximum of 76 weeks. The reduction in employees’ regular work schedules must be between a minimum of 10% and a maximum of 60% on average during the period of the agreement. We invite you to visit the ESDC website or consult with our professionals to obtain more information about the eligibility criteria and the general requirements of the program. What Are the New Measures Related to COVID-19? On March 25, due to the downturn caused by COVID-19, the federal government updated its temporary special measures regarding the WS program, including the following, which: Reduce the requirements associated with preparing the application and the attachments. Starting now and until further notice, employers are no longer required to submit: The recovery plan, Attachment B, which used to be required, has been removed and replaced with a single line in the text of the application; Sales and/or production data from the last two years; Broaden program eligibility to include companies that have only been operating for a year, instead of the usual two years; Remove the required waiting period in between WS applications. How to Submit an Application and the Expected Processing Times Following the recent changes made to the program, there is now a simplified way to submit the application. Employers must fill out the following forms, which have been revised by the federal government: Revised form: Application for a Work-Sharing Agreement (EMP5100) Form - Attachment A (revised): Work-Sharing Unit (EMP5101) For businesses located in Quebec, the application must be sent to the following email address: [email protected]. As of the date this bulletin was written, the ESDC website that provides information on the special measures implemented due to COVID-19 does not specify the amount of time it will take to process applications. However, it does indicate that employers are now asked to submit their applications 10 calendar days before the requested program start date, and that Service Canada will endeavour to reduce processing time to 10 calendar days. Before COVID-19, employers had to send their Work-Sharing application (and the supporting documents) 30 calendar days before the requested start date. Due to the major increase in applications, the federal government now has nine (9) processing centres in Canada for the purpose of processing WS applications and has the additional capacity to further support employers who have questions. A new email address has been created for the purpose of handling requests for information about the WS program: [email protected]. Conclusion Considering the constant changes, we invite you to consult our labour and employment law professionals to ensure that your decisions are in conformity with the various government programs. The federal government may further increase the flexibility of the program’s conditions and wait times. If necessary, we will keep you informed of any changes to the program with future updates. It is also important to note that there are other kinds of programs that could be of interest in the current situation, such as the Supplemental Unemployment Benefit Program, which allows employers to increase their employees’ weekly earnings when they are unemployed due to a temporary stoppage of work or quarantine. If the conditions are met and the plan is registered with Service Canada, the amounts paid by the employer are not deducted from employees’ employment insurance benefits4. The Lavery team is available to help you implement measures and determine the best way to endure this crisis, protect your organization and prepare to return to normal.   See also https://www.canada.ca/en/employment-social-development/corporate/notices/coronavirus.html#h4.01. Employment Insurance Regulations, DORS/96-332, subsection 47(1) and section 49. Employment Insurance Act, S.C. 1996, c. 23. Employment Insurance Regulations, supra note 1, subsection 37(1).

The spread of COVID-19 is having a considerable negative effect on the global economy. Several tax planning strategies adapted to the current situation can be considered in order to mitigate the impact. Tax planning for individuals helps to (i) reduce the taxes payable upon death, (ii) encourage intergenerational business transfers, and (iii) maximize the use of the capital gains deduction, through a trust or otherwise. For businesses in the current economic crisis, creativity and strategic vision are needed. In this context, certain tax plans will allow businesses to (i) maximize liquidity, (ii) reduce a corporate group’s taxes payable in the short term, (iii) optimize the use of losses, and (iv) bring about major tax savings in the long term. Here are a few examples of tax plans that are particularly appropriate for the current situation: Employee stock option plans Reviewing strike prices Strategies for using the capital dividend account Strategies for using losses within a corporate group, including: Intragroup management fees Loans between corporations Amalgamation or liquidation of business corporations Deferral of taxes on imports Recovering the GST/QST on bad debts Strategies to increase the fiscal cost of certain corporate assets and shares Estate freeze in order to lower taxes upon death Estate thawing and refreezing Applicable to a previous freeze whose value exceeds the current value Planning with regard to the rule of the average cost of identical properties Income splitting Leaving Canada Dismantling or creating legal entities to facilitate tax planning These plans are particularly effective in a context of economic downturn and a decrease in the fair market value of investments and assets. It is therefore important to act quickly.  Our taxation team is available to answer all of your questions about establishing a tax plan to suit your needs.

In recent weeks, and especially in recent days, we have seen the serious repercussions of the spread of COVID-19 on Quebec businesses and SMEs. Government authorities are planning financial assistance measures for businesses, and some chambers of commerce have already announced that new services will soon be offered to businesses to help them deal with the crisis. We are as yet unaware of the details of this assistance and how it will be allocated.  In the meantime, what will happen to companies with a franchise business model that are required to meet certain financial undertakings and standards as part of their day-to-day operations? During these unpredictable and uncertain times, how can you be a good franchisor and support your franchisees? Assistance and guidance from franchisors is important in a situation like this. It can take different forms, some of which are described in this bulletin.  This is an extraordinary opportunity to show franchisees that you are a caring provider that considers the survival of their businesses to be a priority.  Here are a few suggestions for supporting your franchisees over the next few weeks, if not the next few months: Give them a temporary break from their financial obligations under the franchise agreement, both in terms of paying royalties and contributing to the advertising fund. In the short term, this will cause you to lose a source of income. However, it will ease the financial pressure on franchisees and allow them to get through this crisis and eventually return to normal operations. If your franchisees are lessees (whether they have a storefront or shopping centre lease), join them in their negotiations with the landlord to try to obtain temporary flexibility in the terms of their leases, such as a suspension of rent payments, a reduction of payable rent or a deferral of payments that will be spread out over several months once the effects of the COVID-19 crisis have subsided, since rental costs are generally a major expense for franchisees. On the other hand, if as a franchisor you are subletting premises to your franchisee, accept the risk of negotiating payment arrangements or taking on a portion of the rent to temporarily relieve the franchisee’s financial burden. Work in collaboration with franchisees to modify their services (take-out food, virtual workout program for gym clients, delivery, increase in online offerings, etc.) while respecting your standards and requirements in order to maintain consistency between the franchises. Allow your franchisees to temporarily cease operations or reduce business hours to minimize certain expenses such as payroll and supply (in this regard, we invite you to read The Coronavirus Guide for Employers: Everyday Measures for the Workplace). Revise some of your standards and policies and provide updates to be adopted by your franchisees (particularly for hygiene and sanitation). Take advantage of these turbulent times to develop new virtual training courses, encourage franchisees to participate in continuing training activities during this period by offering free webinars, or set up virtual brainstorming sessions to innovate and plan for after the COVID-19 pandemic. Temporarily share a portion of supplier rebates with your franchisees, if your franchise concept allows you to collect rebates directly with no obligation to remit them to the franchisees. Develop a marketing strategy for current services or a new temporary offering during the crisis in order to maintain brand visibility. For the benefit of your franchisees, renegotiate certain agreements with suppliers to get better services or rates (e.g. telephone service, internet, inventory, percentage discount on goods useful for operating the business). Facilitate your franchisees’ discussions with their financial institutions, which are currently sensitive to the tense financial situation of Quebec entrepreneurs and willing to find solutions. If you have an online sales platform, establish a policy that allows franchisees to benefit from it, at least temporarily, either by sharing a certain portion of revenues or, for example, delivering to the franchisee closest to the consumer. For franchisees that, tragically, will not have the financial capacity to overcome the crisis, support them through the end of their operations and transition, in order to minimize their losses. If necessary, offer your franchisees phone or virtual assistance and provide them with contacts who can answer their questions and support them. Provide the public with a general message on the status of your network’s products and services offering, and showcase your support to your franchisees in order to convey a clear and consistent message that will sustain your brand and approach. Most of these proposals involve a greater financial commitment on the part of the franchisor. However, it is important to remember that a franchisor has an obligation to collaborate and partner with its franchisees. Of course, no one is bound to achieve the impossible. A franchisor’s capacity to adequately support its franchisees during this difficult period will serve its interests and those of the network in the longer term. Assistance provided by the franchisor will allow more franchisees to survive and resume their activities when the situation improves. The franchisor’s support and, particularly, flexibility with respect to financial obligations arising from the franchise agreement will send a clear message to franchisees that they are not left to fend for themselves during this period of uncertainty, and a greater climate of trust will be established in your franchisor-franchisee relationship.  Moreover, all sectors of Quebec’s economy are affected by the pandemic and a solidarity movement is being established among institutions, financial partners and businesses to implement solutions and strategies to promote trade and the resumption of economic activities. We are following developments on a daily basis. Our franchising and distribution team and all our professionals are at your disposal and offer you their expertise in advising and supporting you in meeting the challenges that the current COVID-19 situation may create for your network. Please do not hesitate to contact us. It will be our pleasure to collaborate to find a solution that is right for YOU. It’s time to stand together!

 The Canadian Intellectual Property Office (CIPO) has made a further announcement concerning the extension of deadlines, to the effect that deadlines falling within March 16 to April 30, 2020 are extended to May 1, 2020. CIPO is otherwise still open for business and our intellectual property team members have been continuing operations and transacting with CIPO on a regular basis, in a remote and secure manner. Please do not hesitate to contact a member of our IP group should you have any questions. Rest assured that we remain at your service for all your legal needs, including those required to manage this pandemic, and that we will keep you informed as the situation evolves. We would like to offer our thoughts and support during these challenging times.

Employers must review their action plan on a daily basis to promote prevention, manage possible or proven contagion among their employees and ensure that business operations continue. Two actions are key: Seeking accurate information from public health officials and governments daily; Taking this information into account when deciding how to meet your obligations to employees while maintaining operations. With the stated objective of containing the spread of the coronavirus, each of us is responsible for adapting our behaviours to an evolving set of circumstances, particularly in the workplace. This new reality impacts the responsibilities of employers. New Directives from The Government of Quebec On March 12, 2020, the province declared a state of emergency and the Quebec government announced the following: All persons returning from abroad or having flu- or cold-like symptoms must voluntarily self-isolate for 14 days; Self-isolation is mandatory and paid for all public service employees and all private and public healthcare, education and daycare workers returning from abroad; Organizations must cancel all indoor gatherings of more than 250 people and any unnecessary gatherings for the next 30 days1. At his press conference, the Premier of Quebec invited private sector employers to take the particular situation facing our society into consideration and to be understanding with employees who must take time off work2. With these measures aimed particularly at establishing social distance to slow the spread of the virus, guidelines have been clarified and may serve as a basis for the needs and requirements of both employers and their employees, taking into account the particularities of each workplace. Obligations in the Workplace Employers must take the measures necessary to protect the health, safety and physical well-being of their employees, their clients and the public. Employees are held to the same standards; that is, to preserve their own health as well as that of their colleagues and any third parties they may be in contact with in the course of or in connection with their work. The Charter of Human Rights and Freedoms, the Act Respecting Occupational Health and Safety, the Canada Labour Code and fundamental principles such as those set out in the Civil Code of Québec provide that individuals must not behave in a way that would cause increased harm to others. They must also act in such a way as not to harm their own health, and, by the same token, that of the people in their workplace. These principles are well known to human resource managers and are foundational to establishing workplace policies and guidelines. Policies and Guidelines for Employees In order to encourage employees to contribute to maintaining a healthy work environment free from contamination risks, employers should diligently inform their employees of their intention to follow government guidelines. Internal guidelines could include the following: Cancelling meetings or other non-essential work events that may promote the spread of the virus; Reminding employees of their obligation to report any situation that may require them to self-isolate; Establishing and informing employees of necessary arrangements should isolation become necessary and telework not be possible; Explaining the steps to follow to plan telework and reminding people of the applicable rules under existing policies and employment contracts regarding the confidentiality of business or personal information used in the workplace; Informing employees about of a contingency plan to define, among other things, emergency contact persons and information transmission protocols; and instructing employees on how to access workplace premises or organize their work in the event of a containment situation. Employee Travel and Professional Activities An employer may cancel any professional activity that could reasonably be expected to pose a risk to the health of its employees, clients or the public. In so doing, an organization modifies its expectations as to workplace deliverables. In the current context and further to the government guidelines issued on March 12, 2020, an employer should: Prohibit all business travel both to affected or unaffected areas; Ask its employees to hold essential meetings by videoconference or other technological means; Provide that any other meeting or professional activity in its offices or elsewhere be held in such a way as to reduce the risk of contagion (e.g., videoconferencing, conference calls, observance of hygiene measures and reasonable distances between people). Isolation of Diagnosed Employees or Preventive Isolation Further to the recommendations of public health authorities and on the basis of the government guidelines issued on March 12, 2020, an employer should require that any employee returning from abroad proceed to self-isolate for 14 days. If the employee shows symptoms before the end of the 14-day isolation period, he or she should contact the services set up by the Ministère de la Santé (1-877-644-4545). A nurse may then refer the employee to a designated COVID-19 clinic if necessary. Prior to permitting such an employee to return to work, an employer should be informed of the outcome of these steps and be satisfied that the employee will not pose a risk to colleagues and clients, which may include requesting a medical certificate from the designated COVID-19 clinic if the employee was referred to one. In the case of business travel at an employer’s request prior to the government directives issued on March 12, 2020, any self-isolation period should be paid. If the travel was personal, the payment and form of remuneration during the self-isolation period depends on certain factors, including: At what moment the decision to maintain the departure was made: before or after the government’s instructions were issued or an explicit employer policy was implemented; Positive or negative diagnosis further to a test; Capacity for telework while in isolation. Should employees be unable to report to work (due to their return from abroad, other reasonable grounds to believe that they may be a carrier, or if they or one of their relatives has tested positive), their employer should consider possible avenues under the employment conditions applicable to each particular employee: Paid leave or other conditions available under the Act respecting labour standards and working conditions or collective agreements in the organization, which must then be agreed upon with the employee in question and with the union’s cooperation, if applicable3; Group disability insurance benefits; Record of Employment for sickness and employment insurance sickness benefits; Quarantine and employment insurance benefits as a result of forced leave from work4; Record of Employment for leave and caregiving benefits; Telework if the employee’s tasks can be performed remotely or adapted to do so. Refusal to work The Act Respecting Occupational Health and Safety allows employees to refuse to perform work if they have reasonable grounds to believe that the performance of said work would expose them to danger for their health, safety or physical wellbeing, or would expose another person to similar danger. This Act also provides for the process by which such refusal must be dealt with. However, the prevention and management of work refusal situations could likely be greatly facilitated if employees are aware of the actions taken by the employer to prevent contamination and other health risks to those present in the workplace. For the protection of employees, suppliers and customers, employers must implement the sanitation measures prescribed by government authorities and make any necessary materials available. It must also encourage its employees to follow sanitation instructions and do the following: Provide access to dispensers for alcohol-based antiseptics, tissues and waste bins; Regularly clean common areas (e.g. meeting rooms, cafeteria, etc.); Provide contact information for Info-Santé and the Ministère de la Santé for additional information or screening. According to the government guidelines issued on March 12, 2020, for work premises that can accommodate 250 or more people, the premises must be prepared, or the number of people limited, or those present must be instructed to remain at least two metres away from each other. Work reorganization In order to maintain their activities and provide service to their clientele, some businesses may find it advantageous to alter the way in which their employees work. In addition to resorting to telework, employers may consider alternative working arrangements to maintain adequate staffing while reducing the risk of spreading the virus: Flexible or modified work schedules or staggered working hours (in accordance with the conditions set out in section 53 of the Act respecting labour standards); Rotating schedules to reduce the number of employees in the workplace at the same time; Solicitation of retirees who can fill absences owing to sickness. Immigration Currently, Canadian immigration authorities have put in place emergency measures for foreign nationals in Canada or abroad whose applications for temporary residence have been delayed because of the closure of Canadian visa application centres in mainland China (among other locations). Extensions have been granted to help applicants to obtain now hard-to-get documents. All other applications and all other components of the Canadian program are not affected at this time. No new medical tests for newcomers have been announced and no specific travel restrictions have yet been adopted, with the exception of self-isolation measures for all those arriving from abroad. Health Canada screening officers are present at some Canadian air and land ports of entry, but this measure is still minimally applied at this time. We expect further restrictions at Canadian ports of entry to be implemented in the coming days as the situation progresses. The Key: Keep your Information Up to Date It is important to make sure that the information that you rely on as an employer to make decisions in the current environment is reliable so that your employees can perform their work safely, and for you to continue offering service to your clients. Prudent HR managers should visit the websites of the competent government authorities to confirm the exact terms of the requirements and guidance that these provide. Each workplace operates in its own context, and employers would do well to plan for various possible solutions depending on their circumstances and considering their specific workforce and the needs of their clientele. The events of the last few days have shown that guidelines can change rapidly (even in the course of a day), especially when the spread of the coronavirus suddenly gains speed or following the directives issued by governments to promote “social distancing” as counter the impacts of a possible mass contamination. The diligent implementation of preventive measures and appropriate action as the situation evolves will help ensure, employers are being responsible while, effectively guarding against future civil or criminal claims. The members of our Labour and Employment and Business Immigration teams are available to answer any questions you may have about measures you are considering or the solutions you are seeking given the realities of your organization and its activities.   Press release on March 12, 2020. See the same Government of Quebec press release. Employee and union cooperation may be necessary if working conditions need to be adjusted at the employer’s request, which may wish to offer paid leave to cover part of the isolation period. The federal government recently amended the conditions applicable to quarantine to suspend the one-week waiting period before Employment Insurance benefits are paid..