Question Period Note: SIMPLIFYING WAGE EARNER PROTECTION PROGRAM PAYMENTS

What are the proposed changes to the Wage Earner Protection Program (WEPP) announced in Budget 2021?

• The WEPP is a Government of Canada program that provides financial support to Canadian workers who have lost their job and are owed eligible wages when their employer files for bankruptcy or becomes subject to receivership.

• Budget 2021 proposes to eliminate the 6.82 per cent deduction that is currently applied to all WEPP payments.

• The 6.82 per cent deduction is intended to represent at source deductions a worker would normally see on their pay.

• The removal of this offset would put an average of an additional $300 in the pockets of Canadians who have lost their job and are owed eligible wages by their insolvent employer. This is particularly important at a time when the recipient may be going through a period of financial stress due to the economic impact of the COVID-19 pandemic.

• The proposed removal of 6.82 per cent will require changes to the WEPP regulations and could come into force as early as fall 2021.

The WEPP provides financial support to all Canadian workers, under federal, provincial and territorial jurisdictions, owed wages when their employer files for bankruptcy or becomes subject to a receivership.

The WEPP provides timely payment of eligible wages, up to an amount equivalent to seven weeks of maximum insurable earnings under the Employment Insurance Act ($7,579 for 2021). WEPP has an annual allocation from the Consolidated Revenue Fund of $49.25 million.

Under current regulations all WEPP payments are subject to a 6.82 per cent offset which is intended to mimic the Canada Pension Plan (CPP) and Employment Insurance (EI) contribution amounts that would normally be source-deducted from an individual’s pay, had the paycheck been issued by the employer. This offset has been a source of confusion for WEPP recipients.

Removal of this offset would increase financial support to Canadians by an average of approximately $300 per WEPP recipient, and do so at a time when COVID-19 is having a significant negative effect on the Canadian economy and when the recipients may be going through a period of financial stress.

In addition, workers who have or will hit the maximum CPP or EI contributions for the year must still incur the WEPP offset. Additionally, workers owed severance pay, which is neither insurable nor pensionable, are subject to the offset and so are the workers owed more than the maximum WEPP payment.

Removal of the offset will ensure that the WEPP is more understandable and transparent, will better reflect actual contribution amounts that would ordinarily be paid to CPP and EI, and will provide added assurance that recipients are paid amounts that are consistent with the amount the trustee or receiver has determined they are owed.

This proposal will require a repeal of subsection 6(b) of the WEPP Regulations and it will be included in an ongoing regulatory initiative, which is targeted to be published in Part II of Canada Gazette in the spring of 2021.

Service Canada delivers WEPP and information can be obtained by visiting a local Service Canada office, their web site www.servicecanada.gc.ca, or by calling the WEPP call centre at 1-866-683-6516.

• Quote from Budget 2021, “In order to simplify payments, and ensure that Canadian workers are paid more of what they’re owed when they need it most, Budget 2021 proposes to eliminate the 6.82 per cent deduction applied to all Wage Earner Protection Program payments. This change is estimated to cost $16.2 million over five years, starting in 2021-22, and $3.3 million ongoing.” (Chap. 3 p. 122)
• The Wage Earner Protection Program (WEPP) provides financial support to workers for “eligible wages” owed if their employer files for bankruptcy or becomes subject to a receivership.
• “Eligible wages” include unpaid amounts for wages, vacation pay, severance and termination pay.
• The maximum payment under the WEPP is equal to seven weeks of maximum insurable earnings under the Employment Insurance Act ($7,579 for 2021).
• Since the WEPP was launched in July 2008, nearly 155,000 workers have received WEPP payments, totalling more than $448 million (as of December 31, 2020).
• For fiscal year 2020-21, Service Canada issued 89 per cent of WEPP payments within 35 days of receipt of a completed application and Trustee Information Form.