COVID – 19: Action Items for Business Owners

In light of the unprecedented steps taken by our governments to try and control the spread of COVID-19, many business owners in Alberta are faced with significant disruption and economic uncertainty. This article outlines certain actions that business owners can take to address some of these concerns.


Most commercial leases are weighted heavily in favour of the landlord, and provide them broad powers to terminate the lease should a tenant fail to make even one payment. Given this disparity in power, it is important as a tenant for you to be proactive and engage with your landlord now, to ensure they are aware of your economic situation, and to see whether they will offer to provide you with a reduction or deferral in rent payments. Additional Lease terms may be of assistance. Your lease may have what is known as a “Force Majeure” clause, which states that neither party can be required to perform their obligations under the lease due to extreme circumstances beyond their control. This generally includes war, labour strikes and natural disasters, and could also apply to the COVID-19 pandemic. This could relieve a tenant who is drastically impacted by the pandemic from the requirement to pay rent. It is important that both tenants and landlords review their obligations in accordance with the lease, including requirements for tenants to stay open, for the landlord to keep the premises clean and safe, the loss of use of common facilities, and other changes to the operation of the lease which impact the premises and may allow for an abatement of rent. The Government of Alberta and the Federal Government are also offering various programs designed to help ease the burden on businesses which can apply to both landlords and tenants:

  • 90-day Utility Deferral: The Government of Alberta has provided a program whereby utility payments can be put off for up to 90 days for businesses that are struggling. If under your lease you are paying your utilities directly, you may contact your utility provider directly to enroll in this program. If the landlord pays the utilities and charges it back to you, encourage them to contact their utility provider to seek the deferral and pass the savings on to you.
  • Education Property Tax: Collection of the education portion of property taxes have been deferred for 6 months throughout the province. As a tenant, if you have a commercial lease whereby you are paying the landlord’s taxes as Additional Rent, you should contact the landlord and see if they can pass these property tax savings on to you.
  • Mortgage Loan Deferral: The Government of Canada has encouraged major banks to engage with their debtors who may struggle to make mortgage payments. A landlord may be able to have some payments for their own mortgage deferred to a later date, and pass those savings on to the tenant by way of a reduction or abatement of rent.


As commerce slows due to COVID-19, businesses will be faced with contracts they have entered into that cannot be completed. This can take a myriad of forms - business owners may no longer require the services they contracted for; delivery of essential products could be delayed; and businesses may be unable to complete contracts entirely due to lack of funds. These are just a few examples of contractual issues that will arise.

In limited circumstances, the common law will recognize excuses for non-completion of commercial contracts, pursuant to the doctrines of impossibility and frustration. These apply when it either becomes objectively impossible to perform a contract, or the entire purpose of the contract is defeated or destroyed, due to circumstances beyond the control of the parties. It may be possible to terminate a contract due to COVID-19 based on these doctrines.

Many contracts contain specific provisions outlining when a contract may become frustrated or impossible to perform, and provide a guide to the steps that should be taken by the parties in such a circumstance. Businesses are encouraged to review in detail those contracts which they feel are at risk and seek legal advice on their options.

As with tenancies, the most prudent strategy is likely to contact the other contracting party, to see if the commercial relationship can be salvaged by revisiting and changing the current agreement in light of the difficulties caused by the epidemic. Best practise would be to engage legal counsel to draft an amendment to the existing agreement, to ensure that all changes are property documented in writing to avoid future issues. For any new contracts, businesses should take the possibility of disruption into account when putting the agreement together. An understanding in writing by everyone that services or supplies may be disrupted due to COVID-19 is essential. For example, in a construction context, one of the parties may be relying on third party suppliers for materials to complete a job. It is entirely possible that supplier cannot deliver materials as scheduled. It is therefore important for the parties to realize and note in writing that a job may be delayed if an essential supplier of goods or materials has a COVID-19 related issue.

Tax Deferrals

The Government of Canada has introduced a number of tax measures to lessen the burden on small business during the crisis. This includes deferral of time to pay federal and provincial income tax, as well as deferral of GST remittances and customs duties.

If you have not already, we encourage business clients to engage with their accountants and ensure they are prepared to take advantage of these various measures. Further information can be found online here:

Wage Subsidy

The Government of Canada has also released a subsidy package for employers to cover wages paid to their employees. Some of the basics of the subsidy are as follows:

  • The Government will subsidise wages paid to employees of 75% of their salary, up to a maximum of $847.00 per week.
  • This covers salaries paid between March 15th and June 6th and therefore can be applied for retroactively.
  • In order to qualify, employers must have suffered a loss of revenue of at least 15% during the month of March, and a 30% drop in the subsequent months.

Eligible employers can apply for the subsidy through the Canada Revenue Agency My Business Account portal.

The Government is also considering expanding the wage subsidy program by providing employers a 100% deduction on payroll contributions to Employment Insurance and the Canada Pension Plan. This has not yet been implemented, and further details are expected in the coming weeks.

The Emergency Wage Subsidy represents a significant expansion of the Government’s previous Temporary Wage Subsidy program, which provided a 10% benefit. If you have already applied for this program, you may still access the Emergency Wage Subsidy, but together the maximum will remain 75%.

Further information on the Emergency Wage Subsidy, including eligibility requirements and the application process, can be found online here:


The Government of Alberta is also offering employers relief for Workers Compensation Board premiums, and has outlined various rules and policies surrounding those employees who must be in self-isolation or quarantine and the options of their employers. Details are found online here:

The Federal Government has also temporarily updated their work sharing program. This assists employers in retaining employees when there is a temporary decrease in business activity beyond the employer’s control. This program allows workers who were employed full time, to have their hours reduced to 40% or two days a week, while receiving EI benefits to supplement their wages at these reduced hours. There are a number of eligibility requirements for the program which are found here:

If you are faced with having to lay off some employees, you should encourage them to apply for the Canada Emergency Response Benefit. This provides $500.00 per week for up to 16 weeks for individuals who are facing unemployment due to COVID-19 related layoffs. The link to the application is here:


This loan program designed to assist small business has been announced by the Government of Canada, but as of the date of this article has not yet been implemented. We will update this article with further information but you are encouraged to keep abreast of further developments, as these programs could provide significant short term relief. Current details as of the date of this article are as follows:

  • Interest free loans of up to $40,000.00 will be available for small businesses who have been impacted by COVID-19.
  • to qualify, a business must have had between $50,000.00 and $1,000,000.00 in total payroll in 2019.
  • If the loan is repaid before December 31st, 2022, 25% of the loan to a maximum of $10,000.00 will be forgiven.
  • These loans are expected to become available within the next week.

We strongly advise everyone to seek legal and accounting advice if they have any questions or concerns regarding these topics, and how their legal rights and government programs can assist in maintaining the viability of their business. For further inquiries, please do not hesitate to contact the writer