Wage Earner Protection Program Act (WEPPA) Protects Employees

August 16, 2012 5:28 pm Published by Leave your thoughts

What is the Wage Earner Protection Program Act and what need was it intended to address?  A repositioning in the bankruptcy asset scramble is expected to shake up existing by the numbers practices for settling corporate failures. Vulnerable wage earners will now get increased protection by way of a new federal act.

The Wage Earner Protection Program Act (WEPPA) places employees of Canadian firms declaring bankruptcy or facing insolvency at the front of the line to recover money.

They now stand ahead of employer remittances to Ottawa for employee CPP and EI contributions, their federal and provincial sales taxes payments as well as previously privileged lenders and other secured creditors.

All major players – banks, creditors, investors, corporate directors, CAIRPs (Canadian Association of Insolvency and Restructuring Professionals) and mainstream accountants – will have to find innovative ways to cope with the new law.

“The intent of the act is to protect front line wage earners, who are the most vulnerable to payroll losses when their employers face bankruptcy or insolvency” says Kevin Brennan, Calgary based vice-chair, CAIRP.

“Most at risk are closely held small and medium sized firms. Larger corporate files are less likely to be involved since they have a higher possibility of restructuring as an operating business. So they keep their payrolls up to date to maintain a greater level of comfort and higher morale to ensure that current employees will stay with the company.” Still, Brennan believes that actual cases implementing WEPPA will be rare. “Short of sudden financial meltdown in smaller, tightly held firms,” he says, “WEPPA may not be needed since most employers pay their employees on time. They realize that many of them live from paycheque to paycheque.

See Also: Personal Bankruptcy

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