Area of Law: Credit, Debt and Bankruptcy
Answer # 0291
Wage Earner Protection Program (WEPP): Protecting employees when a business goes bankruptRegion: Ontario Answer # 0291
What is the Wage Earner Protection Program (WEPP)?
WEPP is a program provided by the federal Government of Canada, which, under certain circumstances, compensates eligible workers for unpaid wages.
Under the Wage Earner Protection Program Act (WEPPA) workers with unpaid wages and benefits are eligible for protection if their employer:
- Files for bankruptcy, or
- Becomes subject to a receivership under the Bankruptcy and Insolvency Act.
Employees are not eligible for WEPP if their employer:
- Has applied for bankruptcy protection but has not filed for bankruptcy, or
- Is not subject to a receivership. If an employer later becomes bankrupt or enters into receivership under the Bankruptcy and Insolvency Act, the employee may become eligible for the WEPP.
Eligible wages are those wages which have been earned within the eligibility period, and include:
- Compensation for services rendered
- Gratuities collected and accounted for by the employer
- Disbursements of a travelling salesperson properly incurred
- Production bonuses and shift premiums
- Vacation pay
To be eligible for termination and severance pay:
- Your employment must have ended within the eligibility period.
The eligibility period:
- Begins six months before a restructuring event and ends on the date of bankruptcy or receivership; or
- Is the six-month period ending on the date of bankruptcy or receivership for employers who do not go through restructuring.
How much does WEPP pay?
The maximum WEPP payment for bankruptcies or receiverships on or after January 1, 2019 is
- is an amount up-to seven times the maximum weekly insurable earnings under the Employment Insurance Act ($7,148.05), minus 6.82% as prescribed by the Wage Earner Protection Program Regulations, making the maximum amount receivable $6,660.55.
How to make a claim
To receive compensation through WEPP, a worker must make an application. There are a number of steps in the process.
- Trustee/Receiver Information Form (TIF)
Applications will not be processed until Service Canada has received the TIF. The trustee who has been named to handle your former employer’s bankruptcy or receivership file is responsible for filing this form. Trustees and Receivers have 45 days after the date of the bankruptcy or receivership to submit a TIF. Service Canada will then send you a copy of this form.
Along with your application, information contained in the TIF will determine if you are eligible under the WEPP, and if so, for how much.
- Submit proof of claim
The employee must submit a proof of claim with the former employer’s trustee or receiver. A proof of claim is a written statement in which a creditor (in this case the creditor is the employee who is owed wages) gives the reason why a debtor owes the money. A letter with the employee’s name, contact information, job title, length of service, details of the days and times worked but not paid, and the amount of wages owed, should be sufficient as proof of claim.
- Submit an online application
After the employee receives the TIF from Service Canada, they can submit an online application. Applications must be submitted to Service Canada within 56 days of the latest of the following dates:
- the date of bankruptcy/receivership,
- the date that your employment ended due to termination, resignation, retirement or expiry of term,
- the date on which the receiver terminated your employment.
You may also be required to provide other supplementary forms. See canada.ca for more information.
If your application is approved
In most cases, Service Canada will finalize your file and issue your payment within 35 days of receiving your completed application. Payments under the WEPP are taxable, and as such, you will be mailed a T4A slip to include with your income tax return.
If your application is rejected
If your application is rejected by Service Canada, you have 30 days to make a written request for a review by filing a Request for Review by Minister form. You may include new information when submitting the form.
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