How workers in Canada are not protected during a crisis
The 354 year-old Hudson’s Bay Company is liquidating its 80 stores, putting over 9,000 jobs at risk. And with the US tariffs being put on Canadian goods, more and more workers will be laid off from companies that go bankrupt. What protections do workers have during a crisis?
We’ll look into what steps you can take to get back the money your employer owes you, and why Canada’s laws and institutions do not do enough to protect workers.
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In theory, you can do the following if your employer goes bankrupt
First, calculate what you are owed such as your gross wages (hourly wages, vacation, overtime, and public holiday pay). And depending on how long you worked, also calculate the termination and severance pay owed to you.
Next, apply for Employment Insurance within 4 weeks of your last day of work. This will allow you to receive 55% of your income while you look for work.
Then, file a claim for your owed wages with the licensed insolvency trustee dealing with the company’s bankruptcy. Canada’s Bankruptcy and Insolvency Act (BIA) lays out the priority of how assets are distributed when a company is liquidated.
Finally, apply for the Wage Earner Protection Program (WEPP). WEPP is a Federal government program that will pay up to a maximum of $8,844.22 for workers whose employer has filed for bankruptcy but still owes them money.
But in practice, Canada’s laws and institutions do not put workers first
1. The Bankruptcy and Insolvency Act (BIA) puts workers at the back of the line
Workers can claim unpaid wages directly with the company that is bankrupt. But workers can only get up to $2,000. Anything larger than $2,000 becomes an unsecured claim and put together with all the other unsecured claims. This means workers owed more than $2,000 are very unlikely to receive anything at all as banks, landlords and other creditors get priority in being paid out first, putting workers last.
2. Employment Insurance (EI) can be hard to access and the rates are low
Too many workers do not qualify for EI. For example, retail workers with unstable hours, working seasonally or who are parents juggling childcare and part-time work may not have worked enough hours in the past year to qualify. Furthermore, EI does not have a minimum benefit rate so some workers may only receive as little as $200 a week.
3. The Wage Earner Protection Program (WEPP) is hard to access and inadequate
Workers can only apply for WEPP if the employer formally files for bankruptcy. In addition, workers can only claim wages earned in the last 6 months before the bankruptcy. In our experience, these deadlines can get complicated when employers fail to formally file for bankruptcy or delay filing. Workers must have a valid Social Insurance Number, which excludes workers with precarious immigration status. Lastly, we know the maximum payment of $8,844.22 will not cover the many weeks of termination and severance pay owing to long-term employees like those who worked for decades at the Hudson’s Bay Company.
Canada’s laws and institutions allow employers to get away with wage theft
Our laws and institutions are not set up to protect workers during a crisis. We know that workers are often put at the back of the line when it should be the opposite! With the tariff crisis happening right now, potential massive job loss and recession, workers in Canada need a strong social safety net. The Workers’ Action Centre is calling for a workers-first response NOW that includes:
- Reducing the number of hours needed to qualify for EI to 360 hours
- Raising the minimum benefit rate to at least $600 a week
- Allowing workers to receive EI while receiving WEPP payments, termination and severance pay
- Freezing rent and food prices and more…
Send an email to federal and provincial representatives!
Further reading:
Bankruptcy and Insolvency Act – Priority of claims
Employment Insurance Benefits
Wage Earner Protection Program (WEPP) for employees