A Primer on the Wage Earner Protection Program Act

  • February 03, 2020
  • Alexandra Monkhouse, Monkhouse Law

Overview

The Wage Earner Protection Program (“WEPP”), under the Wage Earner Protection Program Act (“WEPPA”), [1] provides employees with a relatively accessible safety net in the event of their employer’s insolvency. It ensures the payment of outstanding eligible wages when an employer becomes bankrupt (or the subject to a receivership) and when employer property comes into the possession or control of a receiver as defined in the Bankruptcy and Insolvency Act (the “BIA”). [2]

Wages,[3] other than termination pay and severance pay, owed to an employee must have been earned during the eligibility period, meaning the six-month period before the bankruptcy or receivership.

For bankruptcies or receiverships on or after February 27, 2018, the payment covers eligible wages up to an amount equal to 7 times the maximum weekly insurable earnings under the Employment Insurance Act [4] (or $7,296.17 in 2020).

History

WEPPA was originally enacted in 2005 and came into force in July 2007. The first version of WEPPA was enacted in conjunction with amendments to the BIA [5] to protect employees with wage claims against companies undergoing bankruptcy or receivership proceedings under the BIA by creating a super-priority for eligible wage claims up to a maximum amount. The enactment of WEPPA and the corresponding amendments to the BIA arose after the Standing Senate Committee on Banking, Trade and Commerce released a review of insolvency legislation in Canada.[6] The enactment of WEPPA recognized the lack of protection available to workers’ claims under the BIA, the profound unfairness faced by workers who cannot collect their wages for work already completed, and the potentially devastating impact that such circumstances can have on individual workers as compared to the impact faced by corporate creditors.[7]

After a string of high-profile insolvencies, in 2018, WEPPA was amended to increase wage earner protection benefits, notably by extending the reach of WEPPA to Companies Creditors’ Arrangement Act [8] (“CCAA”) proceedings and by increasing the maximum amount wage earners can receive under the program.[9]