Dealing with a job loss is never easy. The financially-adept deal with the change fairly well as they may be safe with an emergency fund to take them through for a few months or more. Others who prefer to live like the grasshopper rather than the ant add disconcerting questions such as “how do I put food on the table?”, “how am I going to make my mortgage payment?” or variations still involving the pressing need to find money. In such scenarios, any avenue providing money to help tide over the job loss/job search phase is viewed with gratitude. This post will look at a government program that assists eligible employees to receive payments when their employer goes bankrupt.

What is the program about?

Service Canada delivers the Wage Earner Protection Program (WEPP) to compensate eligible employees when their employer files for bankruptcy or becomes subject to a receivership under the Bankruptcy and Insolvency Act. Since December 15, 2011, the program has been expanded to also include workers who lose their jobs when their company’s attempt at restructuring fails and ends in bankruptcy or receivership.

This program provides for unpaid salaries/wages, commissions, vacation pay, gratuities (waiting to be disbursed by the employer), travel expenses, production bonuses, severance pay and termination pay due to such employees. The maximum compensation through WEPP is restricted to the equivalent of 4 weeks of insurable Employment Insurance earnings ($3,531 for 2012), minus amounts set by WEPP regulations (6.82%). There is an eligibility period beginning 6 months before restructuring commences and ending on the date of bankruptcy or receivership. In case of no restructuring, the eligibility period is the 6-month period ending on the date of bankruptcy or receivership.

Non-restrictions worth knowing about

Being related to an employer does not automatically make an employee ineligible but they will have to fill out the WEPP Supplementary Form – Additional Information Regarding your Relationship to your Employer (PDF) to determine if they received special treatment due to their relationship.

Being a foreign worker does not make an employee ineligible either. Having a SIN and meeting these eligibility criteria will help a foreign worker use this program.

Working for the trustee or receiver is not a limiting factor under this program and such employees are also eligible.

How to apply?

Using a valid SIN, workers can apply online through this page. Information about the required documents can be found here. Post-approval, payments are usually disbursed within 4 to 6 weeks. WEPP applications must be submitted within 56 days of the later of the date of bankruptcy/receivership, the date that employment ends due to termination, resignation, etc. or the date on which the receiver terminates employment.

WEPP payments and taxation

The WEPP payment is taxable and recipients will be issued a T4A slip at the end of February.

Have you used the WEPP? Was it a straightforward application process? Do you have any tips for other people who might find themselves with a need for the program?

About the Author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism. You can read his other articles here.

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That’s one of the great things about working for government — my employer is perpetually bankrupt but I always get paid (with raises!).