Understanding Bankruptcy Post Job Loss in Ontario
The concept of declaring bankruptcy after getting laid off in Ontario can seem frightening for many individuals. This fear is significantly attributed to the potential influence of bankruptcy on employment status. This article aims to provide comprehensive insights into this topic, addressing crucial aspects such as bankruptcy laws, potential employment impacts, and available options for those facing such circumstances.
Bankruptcy Regulations: A Fresh Start
Contrary to popular belief, the laws governing bankruptcy are designed to facilitate a fresh start for individuals. They offer protection from crippling debts while enabling a reasonable living standard. Among these regulations, a specific clause in the Bankruptcy and Insolvency Act asserts that an agreement cannot be terminated or altered solely due to bankruptcy.
However, this does not guarantee protection from termination if your current employment agreement stipulates potential termination or restrictions on performing certain tasks following bankruptcy.
Bankruptcy and Your Employer
In most cases, employers exhibit little concern over an employee’s bankruptcy status. In fact, if you have been receiving collection calls at work, your employer might even encourage you to file bankruptcy to eliminate these distractions and refocus on your work.
Consumer Proposal: An Alternative to Bankruptcy
If you file a consumer proposal, there is a specific rule that safeguards your employment from termination solely based on your filing.
Bankruptcy Restrictions on Work Type
Bankruptcy might impose restrictions on certain job types. These limitations generally revolve around trust accounts, bondability, and professional standards.
Trust Accounts
Individuals handling trust accounts (lawyers, real estate agents, or bankruptcy trustees) are prohibited from managing these accounts during bankruptcy. In such situations, you might need to delegate this responsibility to someone else or consider filing a consumer proposal instead.
Bondability
Bondability refers to your employer’s insurance against potential monetary losses. It is usually applicable in jobs involving cash or asset handling on someone else’s behalf. You would need to verify with your employer about the possible impact of bankruptcy. If it could severely affect your job, a consumer proposal can be a viable alternative.
Professional Standards
Certain professional bodies might impose restrictions related to bankruptcy. For instance, if you’re an accountant or insurance agent, bankruptcy might lead to the loss of your license to practice. In such cases, filing a consumer proposal has no effect.
Discussing Bankruptcy with Your Trustee
If you harbor concerns about the impact of bankruptcy on your employment, it’s recommended to discuss this issue with your trustee before filing. They can provide advice based on past cases they have handled.
Bankruptcy or Insolvency: Employee Rights
If your employer is bankrupt or insolvent, there are several federal laws in place to protect your rights and ensure you receive your due wages.
Claim Process
The first step in this process involves filing a “proof of claim” form with your company’s trustee in bankruptcy or receiver. For more information on federal bankruptcy and insolvency laws, you can visit Service Canada or consult a lawyer.
Provincial Claims
In some instances, you may also be able to file a claim provincially under the Employment Standards Act, 2000 (ESA).
Employer Bankruptcy or Receivership
If your employer has filed for bankruptcy or is in receivership, and they owe you wages, you should contact your company’s trustee, receiver, or Service Canada.
Proof of Claim
You’ll likely receive a package from a trustee or court-appointed receiver, guiding you on filing a proof of claim in a bankruptcy and insolvency proceeding. If you do not receive this package, you can contact Service Canada at 1-800-622-6232. Union members can seek assistance from their unions.
Employer Insolvency
If your employer is insolvent, and they owe creditors more than $5 million, they can attempt to restructure their debts under the Companies’ Creditors Arrangement Act (CCAA). In such situations, courts appoint a monitor to oversee the company’s restructuring.
Wage Protection Program
If you’ve lost your job due to your employer’s bankruptcy, receivership, or other insolvency proceedings, you may be eligible for the federal Wage Earner Protection Program (WEPP). All inquiries regarding the WEPP should be made to Service Canada.
In conclusion, declaring bankruptcy after getting laid off in Ontario can be a daunting prospect. However, understanding the laws and regulations can help you navigate this challenging phase. Always consult with legal and financial experts to ensure you make the best decisions for your situation.
