When business slows down, layoffs often seem like the only solution. Canada’s Work-Sharing program gives employers another option. It helps keep trained staff during a temporary downturn by letting employees work fewer hours, while the federal government helps cover lost wages through Employment Insurance (EI).

This program matters for employers facing supply chain issues, market changes, or trade-related uncertainty.

The Work-Sharing program is managed by Employment and Social Development Canada (ESDC). Instead of laying off staff, employers reduce employee hours across a work unit. Employees then receive EI benefits to help make up for the income lost from reduced hours.

What Employers Must Do

Employers join the program by signing a formal Work-Sharing agreement with Service Canada. This agreement includes:

The employer
All participating employees
The union, if the workplace is unionized

The main goal is to keep your workforce together until business improves.

Key Employer Eligibility Rules

To qualify, your business must:

Have operated in Canada for at least 1 year
Be a private business, publicly held company, public corporation, or an eligible non-profit
Have at least 2 EI-eligible employees in the work-sharing unit
Be experiencing a temporary reduction in business activity beyond your control
Show that the reduction would normally lead to layoffs

Employee Requirements

Employees in a work-sharing unit must:

Be EI-eligible
Agree to a minimum 10% reduction in normal weekly earnings
Share the reduction in hours equally within the unit

This shared approach helps the program work as an alternative to layoffs.

How EI Payments Support Employees

Employees continue working reduced hours and receive EI benefits for the hours they lose. Employees receive EI benefits based on how much their hours are reduced. They do not get the full amount as if they were laid off.

Key points:

EI benefits under work sharing are taxable income
Employees do not need to look for other work while on an active agreement
Benefits end when the work-sharing agreement ends

This helps employees keep a steady income and stay connected to your business.

Agreement Length and Special Measures

A standard Work-Sharing agreement lasts for a set period, and you may be able to extend it if the economic situation changes.

The Government of Canada sometimes introduces special measures for businesses affected by trade disruptions or tariffs. These measures may allow longer agreement periods or more flexibility. If your business downturn is linked to trade issues or tariff risks, check the official Work-Sharing website for the latest updates on special measures.

The Work-Sharing program works well if:

Your slowdown is temporary, not permanent
You expect business activity to recover
You want to keep skilled staff and avoid the costs of rehiring

It is not designed for seasonal shutdowns, ongoing labour shortages, or businesses that are permanently downsizing.

If you’re unsure whether work sharing or another employment support fits your situation, visit GrantHub to check your eligibility and compare programs by province and business type.

Common Mistakes to Avoid

Applying for long-term decline
Work sharing only supports temporary business downturns. Permanent restructuring usually leads to rejection.
Not getting employee agreement upfront
Every participating employee must agree in writing. Missing signatures delay or stop approval.
Reducing hours unevenly
All employees in a work-sharing unit must share the reduction equally. Exceptions are not allowed.
Assuming non-profits always qualify
Only certain non-profit organizations are eligible. Check eligibility carefully before applying.

Frequently Asked Questions

Q: What is the Work-Sharing Program in Canada?
It is a federal EI program that lets employers reduce employee hours instead of laying them off, while EI helps replace lost wages.

Q: How long can a work-sharing agreement last?
Agreements have a set duration, with possible extensions. Special measures may sometimes allow extra flexibility for businesses affected by trade issues or tariffs.

Q: Do employees still receive EI while working reduced hours?
Yes. Employees receive EI benefits that match the percentage of hours reduced, while continuing to work part-time.

Q: What qualifies as a temporary decrease in business activity?
Examples include market downturns, supply chain disruptions, or trade-related impacts that are outside the employer’s control.

Q: Is there a minimum number of employees required?
Yes. You must have at least two EI-eligible employees in the work-sharing unit.

Federal vs Provincial Wage Subsidy Programs in Canada: Key Differences
Common Mistakes Employers Make When Applying for Wage Subsidy Grants
How to Use Wage Subsidy and Student Hiring Programs to Reduce Staffing Costs

Next Steps

Work-sharing programs in Canada offer a practical way to avoid layoffs, support your staff, and manage cash flow. Check your eligibility early and explore other workforce supports that may fit your needs.

If you want to compare work sharing with other wage subsidy and employment programs, GrantHub can help you find up-to-date options that match your business profile.

Work-Sharing Programs in Canada: How Employers Can Avoid Layoffs