Employee Rights in the Face of Employer Bankruptcy

As the echoes of the COVID-19 pandemic fade away, the aftermath reveals a challenging landscape for some Canadian businesses. While government assistance and subsidies were lifelines during the crisis, the post-pandemic market has proven tough for certain entities, resulting in diminished government support. What does this evolving scenario mean for employees, especially concerning their entitlement to severance when faced with employer bankruptcy?

For businesses drowning in debt and unable to navigate receivership, the last resort may be filing for bankruptcy. This juncture is particularly distressing for employees, who not only lose their jobs but also confront uncertainty regarding their severance payments. The predicament is compounded for those owed unpaid wages from the period preceding the bankruptcy.

What Happens When Employers Can’t Save Themselves?

Bankruptcy does not absolve employers of their obligation to settle severance and unpaid wages owed to their employees. The harsh reality, though, is less comforting for employees in such situations. As the employer files for bankruptcy, employees transition into the role of unsecured creditors, finding themselves behind other creditors in the line, including government taxes and debts held by secured creditors like banks.

Recognizing the challenges faced by employees in bankruptcies, the federal government has implemented safeguards. The Wage Earner Protection Program (WEPP) steps in to aid employees who, having worked for bankrupt companies, are owed outstanding wages. WEPP extends a limited payment for unpaid wages up to the date of bankruptcy or receivership. For formally terminated employees, WEPP typically covers termination pay and owed severance. Understanding the timelines associated with WEPP is crucial, underscoring the importance of prompt consultation with an employment lawyer to grasp rights and obligations. For more information click here

How Can Experienced Employment Lawyers Help?

In the unfortunate event of dealing with a bankrupt employer, seeking guidance from an experienced employment lawyer becomes imperative. Whitten & Lublin’s seasoned employment lawyers are committed to providing insight and advice tailored to your specific circumstances. If you are navigating the complexities of employer bankruptcy and seeking an employment lawyer, contact Whitten & Lublin online or by phone at (416)-640-2667. Your workplace rights deserve comprehensive protection, and our team is here to support you.