Wage Earner Protection Program: Help for Employees During Bankruptcy

What a stressful event. After you get over the shock, frustration, and sadness, you need a plan.

We are currently facing uncertain times but one never knows the financial stability of our employer. It’s a very difficult experience and time to go through for all those involved, however, it is important to understand the situation and all the remedies available if your employer declared bankruptcy. The Wage Earner Protection Program is designed to protect employees.

Did the Company Really File Bankruptcy?

Firstly confirm whether your employer did in fact file bankruptcy.

There are situations when a business closes but it did not file for bankruptcy. Some of these situations can be:

• A bailiff is appointed by the Landlord for non-payment of rent. Should a business become unable to pay its bills including lease or rent payments, A landlord may appoint a bailiff to collect rents on their behalf. A bailiff may terminate the lease or distrain against the assets including preventing access to the premises; or
• In some other cases, the owner will close the doors and walk away from the business. The stress of operations, the pressures from creditors are often too great.

In both of these two circumstances, if you are owed money for unpaid wages you should contact the Provincial or Territorial Employment and Labour Standards Office in your area.

An Employment Standards Officer will assist and/or represent you to pursue the collection of amounts owed to you for unpaid wages from your former employer.

Wage Earner Protection Plan

In 2005, the Federal government created a program in an effort of fairness, to workers/employees for unpaid wages, in cases when an employer becomes bankrupt or is subject to receivership. The program is the Wage Earner Protection Program (WEPP).

As an employee who is owed money by his or her former employer and the employer becomes bankrupt or goes into receivership, as an employee, you may be eligible to claim up to $7,296.17 for unpaid wages, vacation pay, or severance or termination pay.

There are some conditions to eligible under the WEPP, your employment has ended:

• your former employer has filed for company bankruptcy or is subject to a receivership;
• you are owed wages, vacation pay, termination pay, or severance pay from the former employer;
• amounts owed were earned during the eligibility period or, in the case of termination pay or severance pay, your employment was terminated either during the eligibility period or prior to the discharge of the trustee/receiver.

WEPP in Response to the Covid-19 Pandemic

The WEPP eligibility period is normally for wages owing for the 6-month period before the bankruptcy or receivership. In response to the COVID-19 crisis, the program has temporarily extended the eligibility period as follows:

• If the date of the bankruptcy or receivership is between March 13, 2020, and September 12, 2020, the eligibility period starts on September 13, 2019, and ends on the date of the bankruptcy or receivership
• If the date of the bankruptcy or receivership is between September 13, 2020, and December 30, 2020, the eligibility period is the 12 month period before the bankruptcy or receivership
• If the date of the bankruptcy or receivership is before March 13, 2020, or after December 30, 2020, the eligibility period is the normal 6 months before the bankruptcy or receivership

The dates are also extended, if the employer attempted to restructure its business pursuant to certain provisions of the Bankruptcy & Insolvency Act or the Companies Creditors Arrangement Act and the restructuring subsequently ends in bankruptcy or receivership, the eligibility period starts six months before the restructuring and ends on the date of bankruptcy or receivership.

Act Quickly

Should the company you work for file for bankruptcy or is subject to a receivership, you need to act quickly. Here are some things you can do:

1. Determine the name of the Trustee firm appointed.

You may obtain this information from:

• A notice you already received from the Trustee, or
• you may have been told directly by your employer, or
• you might have read it in the legal section in the newspaper, or on the internet, or
• you may have seen a notice posted on the door of the business.

No matter how you found out this information you will need the name of the Trustee and Trustee firm who has been appointed so you can contact them.

2. File a Proof of Claim with the Trustee’s office.

The Trustee is required to send you a creditors package including proof of claim. You need to complete the proof of claim and return it promptly to the Trustee.

This proof of claim form is your declaration and proof of all amounts owed to you by your employer. The claim should itemize all amounts you are owed including wages, vacation pay, severance, and termination pay. The Trustee should be able to assist you with this.

3. File an application for the Wage Earner Protection Program to Service Canada.

The application form is available online through Service Canada. You will need to complete this form within 57 days of the date of bankruptcy or receivership.

You can still apply to Service Canada if you have not received information from the Trustee but there may be a delay. The information from the Trustee or receiver is used in combination with your application to determine your eligibility and payment.

If you disagree with the amounts the Trustee/receiver has indicated, please discuss with them before applying.

How to Contact WEPP

All inquiries regarding the WEPP, including how much you could receive and eligibility requirements, should be made to the Government of Canada through Service Canada. Call toll free at 1-866-683-6516 (TTY 1-800-926-9105). Additional information may be found on the Service Canada: Wage Earner Protection Program website.

Other Documents

The Trustee’s office is required to complete and send you your Record of Employment (“ROE”). This form is required to file a claim with the Employment Insurance office. It details hours and weeks of previous employment.

The Trustee is required to complete your T-4 and send you a copy. This is to be completed within 30 days of the business ceasing operations. The T-4 may be sent out during the calendar year and will be needed at the end of the year for you to complete your tax return.

If you do not receive this you should contact the Trustee’s office to have it sent to you.

Other Considerations

Although the business has just closed and you will still be in shock, you may want to ask the former boss for a letter of recommendation. Often after time has passed it is difficult to allocate the owner to obtain this. The circumstances are difficult, a reference letter may be valuable for future job opportunities.

In Conclusion

Despite this difficult situation, there are professionals to assist you. If your employer went bankrupt, be patient and persistent to ensure you file your claim to recover any wages that may be owed to you. If this unexpected interruption in pay is causing you personal financial problems, do not hesitate to reach out to us in order to understand your personal options. We offer a free, confidential review of your finances so that you can understand your options.