Human Resources and Social Development Canada

Human Resources and Social Development Canada

July 07, 2008 13:00 ET

Minister Blackburn Announces New Program to Better Protect Canadian Workers

OTTAWA, ONTARIO--(Marketwire - July 7, 2008) - The Honourable Jean-Pierre Blackburn, Minister of Labour and Minister of the Economic Development Agency of Canada for the Regions of Quebec, today announced that the Wage Earner Protection Program (WEPP) is now in force. The program will protect workers' wages when their employer is declared bankrupt or is subject to receivership.

"The Government of Canada has taken action so that hard working men and women will no longer be last in line to receive their unpaid wages," said Minister Blackburn. "Through the Wage Earner Protection Program, workers in Canada will have their salaries protected and their rights safeguarded."

The WEPP will ensure that workers receive compensation when it's needed most - between bankruptcy and finding a new job. The WEPP will provide guaranteed and timely payment of unpaid wages and vacation pay to eligible workers whose employers go bankrupt.

"This is a real step forward for all workers. Too often we saw employees suffer lost wages, benefits and even their pension savings because banks and other creditors were given priority. With a new law that puts government on their side and offers the security of a guaranteed last paycheque and pension contributions, working Canadians will be better off," said Ken Georgetti, President of the Canadian Labour Congress.

Between 10,000 and 20,000 workers make claims for unpaid wages every year. Under the previous system, only a quarter of workers received payment, and they often had to wait up to three years. Those who did receive compensation usually only got a portion of their claim.

"The changes ensure Canada's insolvency legislation remains fair, flexible and responsive to the needs of workers in an ever-changing marketplace," added
Jim Prentice, Minister of Industry.

The Government of Canada is proud to have moved forward with legislation that will benefit workers who, through no fault of their own, find themselves in this situation.

The WEPP is being delivered by Service Canada on behalf of the Labour Program. Service Canada brings Government of Canada services and benefits together in a single delivery network.

For more information on the WEPP, please visit labour.gc.ca. You can also find information about WEPP at servicecanada.gc.ca.

Labour Program Web site: www.labour.gc.ca

BACKGROUNDER

AN OVERVIEW OF THE WAGE EARNER PROTECTION PROGRAM

The Wage Earner Protection Program (WEPP) Act was established within a broader insolvency reform package that includes new measures to improve the protection of workers whose employers become bankrupt or subject to a receivership.

The WEPP provides guaranteed and timely payment of wages and vacation pay that are owed to eligible workers, up to an amount equaling four weeks' maximum insurable earnings under the Employment Insurance (EI) Act (currently about $3,000). It is estimated that the maximum payable under the Program will satisfy 97% of wage claims in full.

Under the previous system, claims for unpaid wages ranked lower than many creditors, including certain Crown claims and all secured creditors. Workers often received no payment as there were not enough assets to satisfy their claims, even in part. It is estimated that unpaid wage claims received only 13 cents on the dollar, in total. In addition, the payment of claims was usually made only at the end of bankruptcy proceedings - a process that could take up to three years.

Approximately 10,000 to 20,000 workers file unpaid wage claims each year and many of them do not receive compensation.

In addition to establishing the WEPP, the insolvency reform legislation enacted a new "limited super-priority" provision within the Bankruptcy and Insolvency Act (BIA) which puts unpaid wage claims ahead of secured creditors over the current assets of the bankrupt employer's estate.

The new limited super-priority supports and complements the WEPP. Individuals who apply to the Program will sign over their wage claim rights to the government for the amount that they receive from the Program. The government in turn will assume the interests of wage earners against the bankrupt employer.

An individual who does not qualify for payment from the WEPP will be able to pursue the wage claim through the limited super-priority and the existing preferred creditor status up to a $2,000 cap.

The Program will cost an estimated $35 million per year and will be funded from general tax revenues. Amounts of payments will vary from year to year, depending on economic conditions.

Should you need more information on the Wage Earner Protection Program, you can visit the Labour Program Web site www.labour.gc.ca or call the Service Canada dedicated information line at: Toll free 1-866-683-6516 (TTY 1-800-926-9105), or visit the Service Canada Web site www.servicecanada.gc.ca.

Contact Information

  • Human Resources and Social Development Canada
    Media Relations Office
    819-994-5559
    or
    Office of Minister Blackburn
    Michael Winterburn
    819-953-5646