Understanding the Wage Earner Protection Program (WEPP)

The Wage Earner Protection Program (WEPP) is an initiative established by the Federal Government with the purpose of safeguarding the rights of employees during instances of bankruptcy or receivership of their employers. This article aims to provide an in-depth understanding of the WEPP, its benefits, and the process involved.

1.Introduction to the Wage Earner Protection Program

The Wage Earner Protection Program (WEPP) was launched by the Federal Government in July 2008. Its inception was in response to the need for a system that could ensure employees of bankrupt or receivership-prone employers receive their due wages.

Note: The term “receivership” refers to a situation where an entity (a receiver) is appointed by a court or creditors to run a company. This typically happens when the company is unable to pay its debts.

 

2. The Purpose of the WEPP

The primary objective of the WEPP is to provide a safety net for employees. This program enables workers to recover up to approximately $3,900 (as of 2016) for unpaid wages, vacation pay, pay in-lieu of notice, termination pay, and severance pay.

3. The Role of Trustee or Receiver

The Trustee or Receiver has a pivotal role in the implementation of the WEPP. Their responsibilities include advising the employees of their rights under the WEPP, calculating the amounts due to employees, and reporting these figures to Service Canada.

4. The Process of Claiming Under WEPP

Once the Trustee or Receiver reports the figures to Service Canada, the employees can file their claims with Service Canada, who then makes the necessary payments directly to the employees.

5. The Role of Service Canada

Service Canada, acting as an intermediary, manages the payment of dues to the employees. Furthermore, they may also be able to recover some of the funds paid to employees from the assets of the bankrupt or receivership-prone company.

6. Employees’ Claims and Priorities

In a scenario of bankruptcy or receivership, the claims of employees for unpaid compensation and vacation pay earned in the six months preceding the event form a secured charge on the cash, accounts receivable and inventory of the company. These claims take precedence over the interests of secured creditors.

7. The Recovery of Funds

Service Canada possesses the ability to recoup a portion of the funds disbursed to employees. They can do this by tapping into the assets of the company that is bankrupt or subject to receivership.

8. The Impact of the WEPP

The impact of the WEPP is significant, as it offers a layer of protection to employees who might otherwise be left with no compensation in the wake of their employers’ bankruptcy or receivership.

9. Future Enhancements to the WEPP

While the WEPP has already proven beneficial to many employees, there’s always room for improvement. The government continually reviews the program to ensure it meets the changing needs of the workforce.

10. Conclusion

The Wage Earner Protection Program (WEPP) is a crucial instrument in protecting employees’ rights during difficult financial times for their employers. It ensures that workers are compensated appropriately, even when their employers are unable to do so.

 

As an employee, understanding the WEPP and its benefits can be beneficial, especially in uncertain economic times. In the unfortunate event of employer bankruptcy or receivership, the program offers a financial safety net to ensure you are compensated for your hard work.

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