Wage Earner Protection Program Act

Short description: Legislation of the Parliament of Canada

Wage Earner Protection Program Act

Parliament of Canada

Long title

* An Act to establish a program for making payments to individuals in respect of wages owed to them by employers who are bankrupt or subject to a receivership

Citation| S.C. 2005, c. 47, s. 1
Considered by| House of Commons of Canada
Considered by| Senate of Canada
Royal assent| 2005-11-25
Legislative history
First reading| June 3, 2005
Second reading| October 5, 2005
Third reading| November 21, 2005
First reading| November 22, 2005
Second reading| November 23, 2005
Third reading| November 24, 2005
Status: In force

The Wage Earner Protection Program Act (French: Loi sur le Programme de protection des salariés; S.C. 2005, c. 47, s.1),[1] is an act of the Parliament of Canada. It was part of a package of reforms to the insolvency law of Canada that were brought into force in 2008 and 2009 to compensate employees of companies made bankrupt or placed into receivership under the Bankruptcy and Insolvency Act.[2] It was subsequently expanded in 2011 to cover employees who lose their jobs when their employer's attempt at restructuring subsequently ends in bankruptcy or receivership.[3]

## Contents

* 1 Background
* 2 Wage Earner Protection Program framework
* 3 Controversy over scope and effect of WEPPA
* 4 References

## Background

The issue of fairness with respect to employees terminated as a result of business failures was addressed by the Parliament of Canada as early as 1949, when the Bankruptcy Act was amended to provide a limited preferred creditor status to such claims. From 1975, legislative proposals were actively considered for the establishment of a wage protection scheme in the event of the bankruptcy, liquidation or receivership of an employer. The various options discussed for how this could be achieved included:

* super priority for wage claims,
* recognition of existing provincial/territorial priorities within the BIA framework,
* a waiver of the waiting period for employment insurance benefits, and
* a wage earner protection fund financed either out of general tax revenues or as part of the employment insurance regime.

In November 2003, the Senate Committee on Banking, Trade and Commerce reviewed the history of these discussions and recommended that the option for super priority status be adopted.[4] In 2005, the BIA was accordingly amended and the WEPPA enacted. These provisions did not immediately come into force, as several technical amendments needed to be passed in 2007. The act came into force on 7 July 2008.[5]

## Wage Earner Protection Program framework

The WEPP is administered by Employment and Social Development Canada, drawing on reports submitted by trustees and receivers of employers undergoing restructuring, bankruptcy or receivership.[6] Under the Program, payouts are made to eligible employees who earned eligible wages during a specified eligibility period, and such payments constitute (in part) a "super-priority" upon the employer's current assets.[7][8]

* Eligible employees are those whose employer has declared bankruptcy or has been placed into receivership, except those who:

* were an officer or a director of the former employer
* had a controlling interest in the business of the former employer
* were a manager whose responsibilities included making binding financial decisions impacting the business of the former employer, and/or making binding decisions on the payment or non payment of wages by the former employer, or
* were not dealing at arm's length with any of these persons[9]

* Eligible wages are:

* 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 former employer, production bonuses and shift premiums that were earned during the eligibility period preceding the bankruptcy or receivership, and
* Severance pay and termination pay for employment that ended in the eligibility period preceding the bankruptcy or receivership.[10]

* The eligibility period starts six months before a restructuring event and ends on the date of bankruptcy or receivership. If the employer did not go through restructuring, the eligibility period is the six-month period ending on the date of bankruptcy or receivership.[10]
* The maximum amount that an eligible individual may receive is equal to four weeks of insurable Employment Insurance (EI) earnings. In 2016, the maximum equals $3,807.68.[11]
* To the extent of the payments made, the WEPP is subrogated to any claims for wages an employee may have against:

* the bankrupt or insolvent employer, and
* where the employer is a corporation, any of its directors[12]

## Controversy over scope and effect of WEPPA

As the act only covers wage claims that arise upon bankruptcy or receivership, it does not figure in proceedings conducted only under the Companies' Creditors Arrangement Act.

The phrase "compensation for services rendered" in the definition for "eligible wages" was held by the British Columbia Supreme Court in 2009 to include other amounts that were earned by the employee and which were directed to be paid to a third party pursuant to a contract covering the employee.[13][14][15] This ruling was upheld in 2010 by the British Columbia Court of Appeal.[16]

It has also been argued that the WEPPA may also have the counterintuitive effect of reducing manufacturing employment in Canada through automation and offshoring of processes, as well as restricting financing that could be available to manufacturers, because of the super-priority nature of the program.[17]

## References

1. ↑ "Wage Earner Protection Program Act". http://laws-lois.justice.gc.ca/eng/acts/W-0.8/index.html.
2. ↑ "Summary of Key Legislative Changes in Chapter 47 of the Statutes of Canada, 2005, and Chapter 36 of the Statutes of Canada, 2007". 19 August 2002. http://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br01782.html.
3. ↑ "Recent legislative changes to the WEPP". http://www.servicecanada.gc.ca/eng/sc/wepp/changes_wepp.shtml.
4. ↑ "DEBTORS AND CREDITORS SHARING THE BURDEN: A Review of the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act". Senate Committee on Banking, Trade and Commerce. November 2003. pp. 87–99. https://sencanada.ca/content/sen/Committee/372/bank/rep/bankruptcy-e.pdf.
5. ↑ "Wage Earner Protection Program in Force, July 7, 2008". http://www.gardiner-roberts.com/documents/WEPP in force.pdf.
6. ↑ "Wage Earner Protection Program". http://www.servicecanada.gc.ca/eng/sc/wepp/index.shtml.
7. ↑ Bankruptcy and Insolvency Act, s. 81.3
8. ↑ "Bankruptcy and Insolvency Act, s. 81.4". http://laws-lois.justice.gc.ca/eng/acts/B-3/page-63.html.
9. ↑ "Am I eligible for the WEPP?". http://www.servicecanada.gc.ca/eng/sc/wepp/apply/who.shtml.
10. ↑ 10.0 10.1 "What are eligible wages under the WEPP?". http://www.servicecanada.gc.ca/eng/sc/wepp/apply/wages.shtml.
11. ↑ "How much will I receive?". http://www.servicecanada.gc.ca/eng/sc/wepp/payment/howmuch.shtml.
12. ↑ "WEPPA, s. 36". http://laws-lois.justice.gc.ca/eng/acts/W-0.8/page-7.html#h-13.
13. ↑ Ted Leroy Trucking Ltd. and 383838 B.C. Ltd. (Re.), 2009 BCSC 41 (CanLII)
14. ↑ "Ted LeRoy Trucking Ltd. and 383838 B.C. Ltd. - Monitor's Ninth report to Court and Receiver's Second report to Court". PricewaterhouseCoopers. http://www.pwc.com/ca/en/car/tedleroy/assets/tedleroy-45_042111.pdf.
15. ↑ Mary I.A. Buttery, Cindy Cheuk. "EMPLOYEE SUPER-PRIORITY UNDER THE WEPPA AND THE BIA: Comments on Ted LeRoy Trucking Ltd. and 383838 B.C. Ltd. (Re)". Fraser Milner Casgrain. http://www.fmc-law.com/upload/en/publications/2009/Employee_SuperPriority_Under_the_WEPPA_and_BIA.pdf.
16. ↑ Ted Leroy Trucking Ltd. v. Century Services Inc., 2010 BCCA 223 (CanLII)
17. ↑ Matthew Lem. "WEPPA: Wage Protection for Employees, Credit Constriction for Employers". BDO Dunwoody. http://www.bdo.ca/library/publications/articles/manufacturing/WEPPA120808.cfm.

0.00

(0 votes)

Original source: https://en.wikipedia.org/wiki/Wage Earner Protection Program Act. Read more

|

Retrieved from "https://handwiki.org/wiki/index.php?title=Finance:Wage_Earner_Protection_Program_Act&oldid=3849294"