Wage Earner Protection Program changes

Summary#

The Regulations Amending the Wage Earner Protection Program Regulations (SOR/2021-196) are final rules amending how the Wage Earner Protection Program works. Published September 1, 2021, they took effect on November 20, 2021, and change who can get payments, when they can be paid, and how trustees are reimbursed in low-asset insolvencies.

What it does#

• Lets a court treat certain liquidating restructurings under the Companies' Creditors Arrangement Act or a proposal under the Bankruptcy and Insolvency Act as triggering earlier WEPP payments if the employer has terminated all employees except those kept to wind down operations.
• Extends WEPP coverage so a Canadian court can treat a foreign insolvency proceeding as a trigger for WEPP, again where employees in Canada have been terminated except for wind‑down staff.
• Removes the mandatory 6.82% reduction that was taken from every WEPP payment. Recipients will no longer see that automatic cut.
• Changes the formula for paying trustees’ fees and expenses when an insolvent employer’s estate has very little or no assets:
  • Introduces a set‑up payment of $1,000, plus $150 for each of the first 10 wage claims and $100 for each additional claim.
  • Allows up to $6,000 (before sales taxes) for certain broader estate administration costs.
  • Adds annual indexing of those amounts to inflation.
• Updates claim and review deadlines and clarifies late‑filing rules:
  • Applications must be made within 56 days after the relevant triggering event (bankruptcy/receivership, employment end, or court determination).
  • Requests for review must be in writing within 30 days of being told of a decision.
  • Late filings can be accepted if something beyond the applicant’s control prevented timely filing.
• Removes old regulatory sections about appeals because those functions were moved to the Canada Industrial Relations Board.
• Includes a transitional rule so older bankruptcies that happened before the new rules still follow the previous regulations.

Who's affected#

• Workers who lost jobs because their employer went bankrupt or into receivership in Canada. This now includes some workers affected earlier during certain liquidating restructurings.
• Canadian employees of firms whose insolvency proceedings happen in another country, if a Canadian court recognizes the foreign proceeding.
• Insolvency professionals (trustees) and receivers. The new payment rules target trustees who take on low‑asset estates.
• Service Canada, which processes WEPP claims and trustee payments, and other partners involved in WEPP administration.
• Small businesses are not expected to face new regulatory costs because the changes affect program eligibility and payments, not business obligations.

Why it matters#

• More people can access WEPP sooner when an employer is winding down under certain restructuring proceedings. Some former employees could get money months earlier.
• Removing the 6.82% offset means recipients keep more of what they are owed. For the average payment, that was about an extra $315 per person.
• Better payments to trustees aim to encourage them to take on low‑asset bankruptcies. That should open WEPP access to workers of small or low‑asset employers that might otherwise go unadministered.
• Over a 10‑year estimate, the government put the present value of benefits at $71.2 million, costs at $63.8 million, and a net present value of $7.4 million. These are program‑level financial estimates prepared by the government.