Question Period Note: WAGE EARNER PROTECTION PROGRAM

Variance in spending for the Wage Earner Protection Program for 2022-2023

The Wage Earner Protection Program (WEPP) helps reduce the economic insecurity of Canadian workers when owed unpaid wages by an insolvent employer.

Actual WEPP spending in fiscal year 2022-2023 reached $25.29 million. This was less than the annual WEPP statutory allotment of $49.25 million.

This variance can largely be attributed to a decrease in corporate bankruptcies due to the government financial supports for businesses during the COVID-19 pandemic, and an increase in recovery of WEPP payments issued in previous years.

As a result, in 2022-2023, the total number of WEPP recipients was approximately 5,000. In a typical year, WEPP issues payments to approximately 11,700 individuals.

The Wage Earner Protection Program (WEPP) provides financial support to workers for eligible wages owed to them when their employer has filed for bankruptcy, has become subject to a receivership or subject to other WEPP qualifying insolvency proceedings. Eligible wages under the WEPP include unpaid amounts for wages, vacation pay, expenses of travelling salesperson, termination, and severance pay.

Through the WEPP, workers who are owed wages by their insolvent employer can receive payment from the federal government for eligible wages earned, but not paid, in the six-month period leading up to a bankruptcy or receivership or other WEPP qualifying insolvency proceedings.

To be eligible for a WEPP payment, a claimant must meet three conditions:

Their employment must have ended;

Their employer must have entered bankruptcy or become subject to receivership or other qualifying event; and

Eligible wages must be outstanding.

WEPP has an annual allocation of $49.25 million. WEPP funds are drawn from the Consolidated Revenue Fund.

The drop in WEPP demand is part of a more generalized decline in insolvencies observed by the Canadian Superintendent of Bankruptcy, which noted a 7% drop in non-consumer bankruptcies and a 23% drop in receivership in 2022. Other factors contributing to lower WEPP demand may also include government economic support programs introduced to address the COVID-19 pandemic, and fewer large companies have become insolvent this fiscal year, with large companies typically forming the majority of WEPP payments.

When a WEPP payment is made to a recipient, the Government of Canada, by subrogation, replaces the recipient in the insolvency proceeding, up to the amount of WEPP payment.

The recipient’s entitlement to any further payment from the insolvent employer’s estate would first be applied against the Government’s debt, up to a maximum of the WEPP payment made to the recipient. Any amount exceeding the initial WEPP payment would be issued to the recipient. The recovery of the Government’s debt is often realized a few years following the initial WEPP payment.

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