Wage Earner Protection Program changes take effect

Summary#

This Order (SI/2021-55) sets November 20, 2021 as the date when parts of the Budget Implementation Act, 2018, No. 2 take effect to change the Wage Earner Protection Program Act. The changes expand when and how workers can claim unpaid wages after an employer becomes insolvent and make some administrative fixes.

What it does#

• Fixes November 20, 2021 as the day certain provisions of the Budget Implementation Act, 2018, No. 2 come into force, which amend the Wage Earner Protection Program Act.
• Expands the types of insolvency events that can trigger a WEPP payment to include:
  • restructuring or liquidation proceedings that are likely to lead to a bankruptcy or receivership, and
  • foreign insolvency proceedings that a Canadian court recognizes under the Bankruptcy and Insolvency Act.
• Gives the Governor in Council authority to make rules (regulations) about the conditions under which payments could be made for those new kinds of insolvency events.
• Clarifies that the Minister of Labour can pay trustees’ fees or expenses for duties under WEPP and the Bankruptcy and Insolvency Act, to encourage trustees to administer small or no-asset cases.
• Makes several housekeeping changes, such as updating the law’s long title, broadening its stated purpose to reflect the new coverage, and clarifying some terms.

Who's affected#

• Workers who are owed wages when their employer goes bankrupt, enters receivership, or undergoes certain restructurings.
• Canadian workers whose employer is involved in a foreign insolvency proceeding that is recognized in Canada.
• Trustees and insolvency professionals who handle small or no-asset cases.
• Small and medium-sized businesses indirectly, because clearer rules may affect how insolvencies are handled.
• If it is unclear exactly which insolvency cases will qualify under the new rules, courts and regulators will help interpret them.

Why it matters#

• More workers could get help recovering unpaid wages in situations that previously might not have qualified for WEPP, such as some restructurings or foreign insolvencies.
• Clarifying payment for trustee work may encourage trustees to take on low-asset cases, which can improve access to WEPP for employees of smaller employers.
• WEPP payments remain limited to the program’s maximum, which is calculated as seven weeks of Employment Insurance maximum insurable earnings (for example, $7,579 for 2021).
• This Order is mainly administrative: it sets the date these changes start to apply so the expanded rules can be used in practice.