Employee Rights to Bankruptcy Protection in Canada

Employee Rights to Bankruptcy Protection in Canada

The Bankruptcy and Insolvency Act (BIA) is federal law that deals with all bankruptcy situations. If a person or company has filed for or been forced into bankruptcy it means they have no resources to pay for their business operations. This person or company who has filed for or been forced into bankruptcy is called the debtor (can no longer pay their debts), and this person’s non-exempt properties are given to a Licensed Insolvency Trustee (LIT) who then sells it to creditors.

If the employee is owed wages from a bankrupt company

If the employee is legally eligible to work in Canada, they are protected under the Wage Earner Protection Program (WEPP) if their workplace faces bankruptcy. To receive the money that is owed and protected under the WEPP, the employee must fill out an application with Service Canada to access this program.

First, the LIT will give the employee notice that a bankruptcy has been filed. The employee will then get a package of information from the LIT that will include a proof of claim form that will need to be filled out by the employee. The form will include name of creditor, the nature and amount of the claim, and any other additional information needed for the claim. The employee may include any other information that may help to prove their claim.

If you are an employee working for a corporation, the Ministry of Labour may be able to find particular directors who were in charge of paying wages who may be required to pay under the Employment Standards Act.

Steps to Filing a Claim

As an employee, filing a claim may seem daunting but it can be handled in a few simple steps.

  1. Contact a lawyer
  2. Assemble documents that you may need to help answer questions in the claim form. These documents are not necessary, but they may help to speed up the process.
  3. Provide as much detail as possible. It is required that the employee fill out any mandatory information that will be marked as such on the page. If this information is unknown, just say so. Including more and accurate information will help the process move faster.
  4. If possible, try to fill out the claim online.

If you have any further questions about company bankruptcy and how this affects you as an employee, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today.