What Happens if my Employer Declares Bankruptcy?
Finding out that your employer has filed for Bankruptcy can leave you unsure of what to do and where to turn. This news can feel particularly daunting at the moment, with soaring inflation and the rising cost of living.
But before you panic, there is help at hand to ensure you get the support you need. The Wage Earner Protection Program (WEPP) was developed by the federal government to protect workers when employers become bankrupt or are subject to a receivership.
If your employer has filed Bankruptcy, or you’re fearful they may be facing financial hardship, it’s important to understand that there is support available. The WEPP is designed to protect employees, so you can receive the wages that you are entitled to if your employer becomes insolvent.
What is the Wage Earner Protection Program (WEPP)?
The Wage Earner Protection Program (WEPP) is an act of the Parliament of Canada, introduced as part of the reforms to the insolvency law, in 2008 and 2009. It helps to compensate employees of companies who have declared Bankruptcy or are subject to a receivership, under the Bankruptcy and Insolvency Act. (BIA)
If your employer has filed for Bankruptcy or is in receivership, WEPP offers payment of outstanding eligible wages. You may receive a one-time payment of up to an amount equivalent to seven times your maximum weekly insurable earnings, under the Employment Insurance Act. For 2022, this amount is up to $8,117.34.
Am I eligible for the Wage Earner Protection Program?
You may be eligible to receive a payment under the Wage Earner Protection Program, if:
- Your employment has ended
- Your former employer has filed for Bankruptcy, is subject to a receivership, or other WEPP qualifying insolvency proceedings
- You are owed wages, vacation pay, termination pay or severance pay from your former employer
- The 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
It’s unlikely that you will be eligible for WEPP if:
- You were an Officer or a Director of your former employer
- You had a controlling interest in the business of your former employer
- You were a manager whose responsibilities included making binding financial decisions that impacted the business of your former employer, or impacted the payment or non-payment of wages
Check that your employer did actually file for Bankruptcy
Before you apply, it’s important to confirm whether your employer did file for Bankruptcy. Just because a business has closed due to financial reasons, this doesn’t mean it definitely went bankrupt. It may be that the business owner has walked away from the business, and is working with creditors or banks to resolve their debts.
If you are owed money for unpaid wages, you should contact the Provincial or Territorial Employment and Labour Standards Office. An Employment Standards Officer in your area will then help you to pursue the collection of the unpaid wages you are owed by your former employer.
How to apply for WEPP
Here is a step-by-step guide of how to apply for the Wage Earner Protection Program:
- TIF: Applications cannot be processed unless Service Canada has received the Trustee/Receiver Information Form (TIF). The Trustee who has been appointed to handle your former employer’s Bankruptcy or receivership is responsible for filing this form. They have 45 days after the date of the Bankruptcy or receivership to submit a TIF. You will then be sent a copy of the form.
- Proof of Claim: You will need to submit a Proof of Claim to the Trustee or receiver. A Proof of Claim is a written statement or form that is filed during receivership, bankruptcy or other WEPP qualifying insolvency proceedings, to confirm that your former employer owes you wages
- Apply: Once you’ve received the TIF, you can submit an online application. You will need to apply within 56 days of the following: the date of the Bankruptcy/receivership, or the date that your former employer terminated all employees. Or, the date that your employment ended due to resignation, termination, retirement or expiry of term, or the date which the receiver terminated your employment
What if my employer’s business closes without filing a Bankruptcy or receivership?
Unfortunately, if your employer’s business closes but they have not filed for Bankruptcy, receivership or other WEPP qualifying insolvency proceeding, you are NOT eligible for the Wage Earner Protection Program.
But there may be alternative support available to you in these difficult times – you may ask for help under the federal or provincial Labour Standards legislation. Alternatively, you can consult with a Licensed Insolvency Trustee who can guide you in the right direction.
LITs are experts in all areas of financial support and insolvency, from Bankruptcy to budgeting. If money feels tight right now and your financial situation is affecting your wellbeing, speaking with a licensed professional can help take some weight off your shoulders.
In need of financial support?
Hearing that your employer has filed for Bankruptcy can leave you fearful for the future, but there is support available to ease your anxieties. At Allan Marshall & Associates, our professional and supportive Licensed Insolvency Trustees have years of experience to help you through financial difficulties. They will explain all options available to you. Contact one of our Licensed Insolvency Trustees today. We can help™.
