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Find Out About Canada's Wage Earner Protection Program

All You Need to Know About the Wage Earner Protection Program

The wages of Canadian employees are protected. These protections stand regardless of employers’ willingness or ability to pay. Even if your employer declares bankruptcy or is subject to receivership, you are entitled to unpaid wages. The protections you receive are all provided under the Wage Earner Protection Program (WEPP).

If your employer is going bankrupt or you have outstanding unpaid wages owed to you, the WEPP is your resource. So, let’s go over what the program is and how you can use it to protect your earnings.

What Is the Wage Earner Protection Program?

The WEPP is a federal government program for compensating unpaid employees. Under certain circumstances, eligible workers are compensated for unpaid earnings.

According to the Government of Canada, between 10,000 and 15,000 Canadians have unpaid wage claims every year when their employers go bankrupt. The WEPP may cover unpaid wages due to company bankruptcy. In addition, it can provide compensation for unpaid:

  • Vacation pay
  • Termination pay
  • Severance pay
  • Commissions
  • Compensation for services rendered
  • Gratuities collected and accounted for by the employer
  • Disbursements of a travelling salesperson properly incurred
  • Production bonuses and shift premiums

Wage Earner Protection Program Eligibility Requirements

The WEPP may entitle you to payment for your unpaid wages. There are several criteria you must meet for general eligibility. Then there are separate eligibility requirements for vacation, severance, and termination pay.

Any wage earner that meets the following criteria may apply for the WEPP:

  • The employment has ended
  • The former employer went bankrupt or is subject to receivership
  • The former employer owes the former employee money

If the above describes your situation, it is advisable to apply for the WEPP. There are no guarantees that you will be compensated. But you are very likely eligible to receive unpaid compensation due to you.

If you want to claim unpaid vacation pay, you must claim vacation pay earned during the six months before the date your former employer declared bankruptcy or receivership. Severance and termination pay are also covered for those last six months.

There is also one extra condition surrounding your former employer’s bankruptcy or receivership. If your employer went through a restructuring before their bankruptcy or receivership, the six-month period shifts to the six months before the restructuring event. However, the eligible period still ends on the date of bankruptcy or receivership.

In regard to the WEPP, a ‘restructuring event’ is an event falling under either:

a) Division I, Part III, the Bankruptcy and Insolvency Act
b) Proceedings falling under the Companies’ Creditors Arrangement Act

What to Do if You Meet the Eligibility Requirements

If you’re eligible for the WEPP and want to make a claim, it’s time to apply. You have several steps ahead of you.

For a WEPP application to be processed, Service Canada must receive a Trustee/Receiver Information Form. This form must be filed by the trustee handling your former employer’s bankruptcy or receivership file. Trustees and Receivers are given just 45 days after the filing to submit the Trustee/Receiver Information Form. Service Canada will send you a form after the Trustee files.

Next, you’ll need to submit proof of claim with your former employer’s Trustee or Receiver. This is a written statement from a creditor (in this case, you) explaining why you’re owed money. Your proof of claim should include:

  • Your name and contact information
  • Your job title
  • The length of your employment
  • The details of the times you haven’t been compensated for
  • The amount you’re owed

With this, you can submit an online application to Service Canada. But remember to do it fast! Applications to Service Canada are only accepted within 56 days of:

  • The bankruptcy or receivership filing date
  • The date your employment ended

In select cases, Service Canada may request additional forms. These requests are at their discretion.

After Approval

If your application is approved, you should receive your payment within a month of receiving your completed application. You’ll be mailed your money alongside a T4A slip to include in your tax return.

In the case that your claim doesn’t get approved, don’t give up! You can still file a Request for Review by Minister. This submission must be made within 30 days of your rejection by Service Canada.

How Much Will I Get Paid?

This question is answered by the Employment Insurance Act. You may receive a maximum of seven weeks’ maximum insurable earnings.

The WEPP is a good measure for terminated employees that are owed their wages. If you’re in one of the positions we’ve discussed, it is your main option for recourse.

If your employer just declared bankruptcy, and you need help, call us today at 519-310-JOHN (5646)

John Adamson, Licensed Insolvency Trustee Ontario

John Adamson, CPA, CMA

John is a Licensed Insolvency Trustee (1994), a Chartered Insolvency and Restructuring Professional (CIRP – 1994), and a Chartered Professional Accountant with a Certified Management Accounting designation (CPA, CMA – 1992). His experience includes more than 25 years of helping individuals, small businesses, their owners and even lenders, find solutions to their debt problems.

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