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Employee Rights in Bankruptcy Protection and Bankruptcy⁄Receivership

  • Issued: February 2009
  • Content last reviewed: November 2017

Disclaimer

The company I work for filed for bankruptcy or is in receivership under the Bankruptcy and Insolvency Act, and they owe me wages. What should I do?

The Bankruptcy and Insolvency Act (BIA), is a federal law. If your wages are a claim provable in bankruptcy or there is a court-appointed receivership and the court has issued a stay of proceedings, the Ministry of Labour is limited in the action it can take under the Employment Standards Act, 2000 (ESA),

  1. You should receive a package of information from the trustee or receiver.  The information in the package will guide you on what steps you need to take to file a proof of claim with the trustee or receiver, and may include information about the Government of Canada’s Wage Earner Protection Program (WEPP).  If you do not receive such a package, please contact Service Canada at 1–800–622–6232. If you are represented by a union, you should contact your union for information and assistance.

In some cases, where the employer is a corporation, the Ministry of Labour may be able to find directors liable for certain unpaid wages determined owing under the ESA. However, directors are not liable for unpaid termination or severance pay under the ESA.

If your employer is a corporation that is bankrupt or in receivership, a director can only be found liable for wages under the ESA if the employee has filed a claim for unpaid wages with the receiver or trustee and the claim has not been paid. The ministry recommends you take the following steps as soon as possible:

  • File a proof of claim with the trustee or receiver
  • Provide proof that you have filed a proof of claim to the employment standards officer assigned to your claim.

If you believe you are an employee and that your employment rights have been violated, you can file a claim with the Ministry of Labour:

Is there a program that will pay me some of the wages owing if my company is bankrupt?

The federal Wage Earner Protection Program (WEPP), offers some compensation to eligible employees who are owed money from a bankrupt employer or one who is in receivership.

To access this program you must file an application for payment with Service Canada.

For more information on the WEPP, call Service Canada at 1-800-622-6232.

For further information about the ESA please contact the Ministry of Labour’s Employment Standards Information Centre:

Greater Toronto Area: 416–326–7160

Toll–free Canada–wide: 1–800–531–5551

TTY for hearing impaired: 1–866–567–8893

My company has filed for protection under the Companies' Creditors Arrangement Act. How does this affect me? What should I do?

The Companies’ Creditors Arrangement Act (CCAA) is a federal statute that allows insolvent corporations that owe more than $5 million to creditors to restructure their debt. In a typical CCAA case, a corporation will propose an arrangement with its various creditors to compromise its debts, known as a Plan of Arrangement. A court-appointed monitor supervises the restructuring process under the CCAA.

By filing for protection, your company is attempting to re–arrange its debts to be able to survive and avoid bankruptcy.

You should contact your employer and the monitor for information and assistance. If you are represented by a union, you should contact your union for information and assistance

For more information on the CCAA call Service Canada at 1–800–622–6232.

Disclaimer: This resource has been prepared to help employees and employers understand some of the minimum rights and obligations established under the Employment Standards Act, 2000 (ESA) and regulations. It is not legal advice. It is not intended to replace the ESA or regulations and reference should always be made to the official version of the legislation. Although we endeavor to ensure that the information in this resource is as current and accurate as possible, errors do occasionally, occur. The ESA provides minimum standards only. Some employees may have greater rights under an employment contract, collective agreement, the common law or other legislation. Employers and employees may wish to obtain legal advice.