The Wage Earner Protection Program Act (WEPPA) is in force since July 7th 2008.
This Government of Canada program is designed to help workers whose employer went bankrupt or is subject to a receivership. It also aims to support workers who lost their job because their employer went bankrupt or became subject to a receivership after unsuccessfully trying to restructure.
The Wage Earner Protection Program (WEPP) is particularly important for precarious and vulnerable workers. According to Industry Canada, most bankruptcies occur in low-wage non-unionized sectors with a dubious future. Each year, more than 60% of these bankruptcies occur in the retail, accommodation and food, and personal services sectors, as well as businesses with fewer than 10 employees who offer the most vulnerable jobs.
Eligibility for the Wage Earner Protection Program
The following criteria must be met to be eligible to the WEPP:
- An employment has ended due to a permanent and definitive termination of the employment
- At least 7 consecutive days during which no work has been done for the employer
- No wages have been paid to the worker for this period
- The employer must be bankrupt or subject to a receivership
- The worker must be owed eligible wages accumulated during the period beginning 6 months before a restructuring and ending on the date of bankruptcy or receivership.
- Should the employer not have gone through restructuring, the eligibility period is the 6 month period ending on the date of bankruptcy or receivership.
For the purposes of the program, a restructuring corresponds to a proposal filed under Division I of Part III of the Bankruptcy and Insolvency Act (BIA) or to proceedings under the Companies’ Creditors Arrangement Act (CCAA).
The concept of wages under the Wage Earner Protection Program Act
Under the WEPPA, wages include:
- Salaries
- Commissions
- Compensation for services rendered
- Vacation pay
- Gratuities accounted for by the employer
- Disbursements of a travelling salesperson properly incurred in and about the business of the bankrupt or of the person subject to receivership
- Performance bonuses
- Shift premiums
Severance pay and termination pay for employment are also included since January 27th, 2009.
The payment may represent a maximum of 4 weeks of insurable Employment Insurance earnings ($3,807.68 for 2015), minus amounts set out in regulations.
Filing an application under the Wage Earner Protection Program
Applications must be submitted by the worker to Service Canada within 56 days of the later of the following:
- the date of the bankruptcy or receivership
- the date employment ended due to termination, resignation, retirement or expiry of contract
- the date on which the receiver terminated employment
If the worker, due to circumstances beyond his or her control, is prevented from filing within the prescribed time frame, he or she must provide a written explanation for the delay.
The following persons are not eligible to receive payment under the WEPP:
- officers or directors of the business of the former employer;
- shareholders who had a controlling interest in the business of the former employer;
- managers empowered to make binding decisions on the payment of wages by the business of the former employer;
- people who were not dealing at arm’s length with any of the above-mentioned persons, except if they can prove that such a link had no impact on their working relationship.