By Jean-Daniel Breton, CPA, FCIRP (ret.), FIIC and Emmanuel Phaneuf, M. Sc., CIRP, LIT¹, Partner, Raymond Chabot Grant Thornton

The Wage Earner Protection Program (“WEPP”) just turned 20 years old on November 25, 2025. Happy birthday, may it have many more. This milestone gives us an opportunity to consider whether it has acquired the level of maturity commonly associated with adulthood.

In a bold spilling the beans move, we will reveal our conclusion here, in the hope that the reader will not stop reading this early in the article but will be interested in reading our exciting and insightful analysis leading us to this conclusion. You can appreciate from this sentence that humility is not our strong suit.

Our conclusion is that while the WEPP has come a long way since its inception, it still needs a lot of improvement before we can consider it mature.

This article does not address all of the issues associated with the WEPP – articles to that effect have already been written and published,² and we would need a lot more space than what we were allotted in this publication. Rather, we will focus on the program’s creation, the significant changes made since then, and the most important areas that still require improvement, in our view.

The inception

We will not describe in detail the process by which the WEPP came to be, as this was addressed in one of the articles referred to above.³ Suffice it to say that the Wage Earner Protection Program Act (“WEPPA”) was introduced as part of legislation seeking changes to the Canadian insolvency laws,⁴ in the waning days of the 38th Parliament, in 2005. The WEPPA was used as a political strategy to gain popularity with the electorate. The strategy backfired when the legislation received strong support in the House and the Senate and was approved, even though the encompassing legislation4 had substantial flaws. Its approval was given on the understanding that the legislation would be amended before coming into effect.

In fact, the legislation had to wait for the drafting of modifying legislation, its approval in December 2007⁵ and the drafting of accompanying regulations, such that the draft legislation only came into force in July 2008 and September 2009. The WEPPA portion of the legislation was among the provisions that came into force in 2008, together with its accompanying regulations, the Wage Earner Protection Program Regulations (“WEPPR”). ⁶

So even though the WEPP was born in November, 2005, it only started breathing in July 2008, more than two and a half years later. From the outset, the program generated dissatisfaction among many stakeholders:

• Lenders objected to what they viewed as an encroachment on their security over current assets⁷, as well as to the additional professional fees required to administer the process;

• Insolvency professionals expressed concern about the increased administrative burden, particularly in an environment where their fees are frequently criticized, and about the impact of the superpriority on the asset base available to satisfy those fees;

• Employees themselves were dissatisfied, at least initially, as the program covered only a limited portion of their claims, if any⁸;

• The government was discontented, having initially assumed that the program would require minimal public funding, on the basis that payments advanced to employees would largely be recovered from the estate or from the insolvent employer’s directors.

Of note, the WEPP and the superpriority under the Bankruptcy and Insolvency Act (“BIA”) are too often confused with one another, even though they are different concepts. The superpriority is a distribution scheme from the estate, while the WEPP is a program funded by the government that acts as a guarantee of sort for a portion of the employees’ unpaid claims (i.e. including severance or termination pay), whether or not funds are available for distribution in the estate. The close connection comes from the fact that the government receives an assignment of the employee’s claim and thus benefits from the superpriority if funds are available for distribution.

Given that the WEPP only effectively began to operate some two and a half years after its birth, and in light of the sustained vilification it has faced, it is hardly surprising that the program has encountered developmental challenges and has not yet reached full maturity.

Significant improvements

The articles published in the Annual Review of Insolvency Law⁹ contain lengthy discussions of problems identified with the WEPP. Nevertheless, despite these shortcomings, the conclusion reached in each article is largely the same: the program is fundamentally worthwhile and achieves much in protecting employees’ rights.

Stressing that perfection can be the enemy of the good, we reiterate our support for the program. While the WEPP can undoubtedly be improved, we conclude that an imperfect WEPP is preferable to the absence of such a program altogether.

That should not deter us from a continuous improvement objective, and we are pleased to see that numerous significant improvements have been made between July 2008 and November 2021. The more relevant and significant improvements are summarized below:

• Extending the types of claims that are susceptible to be paid under the program, to include claims for severance or termination pay, and increasing the amount of the benefit, from four to seven times the maximum weekly insurable earnings under the Employment Insurance Act;¹⁰

• Amending the period for which a claim can be made, to avoid situations where a claim could be denied because of time elapsed between the inception of a restructuring process and bankruptcy or receivership;

• Some administrative issues were corrected, to ensure that employees retained by an insolvency professional to wind up operations or liquidate assets would not be at risk of losing access to the benefits;

• Broadening eligibility to cover foreign insolvency proceedings recognized in Canada, where the prescribed criteria are satisfied;

• Extending the types of proceedings for which benefits might be available, to include some restructuring proceedings under the BIA or Companies’ Creditors Arrangement Act (“CCAA”),¹¹ provided the prescribed criteria are met;

• Creating a mechanism to fund insolvency professionals in asset‑poor estates, thereby reducing the incidence of abandoned “orphan estates.”

What is still missing?

This section outlines our proposed improvements to the program. The recommendations that follow are not intended to be exhaustive; as with any program, there will always be opportunities to refine its design, enhance its effectiveness, reduce costs, or lessen administrative burdens. Again, and for the avoidance of doubt, these suggestions are advanced in the context of a program that we regard as both meritorious and necessary to protect a particularly vulnerable group of stakeholders.

Our suggested improvements are outlined below, in no particular order.

1. Administrative efficiency:

The program relies on insolvency professionals providing information to affected employees and to Employment and Social Development Canada (ESDC), which administers the program. Employees must then file their own claims, which are verified against the information supplied by the insolvency professional before a decision is rendered.

While this process entails some inherent inefficiencies in information‑sharing between insolvency professionals and ESDC, it has improved over time, with ongoing collaboration among stakeholders aimed at identifying further efficiency gains.

Nevertheless, as soon as an error occurs or even a simple change is required, the process must be restarted from the beginning for each claimant. Indeed, there is currently no mechanism to amend or supplement information that has already been submitted.

2. Liability of insolvency professionals:

The program places significant reliance on insolvency professionals to generate the information required to pay benefits to eligible employees. In most cases, insolvency professionals must rely on the estate, a secured creditor, or a guarantor to fund this work and are not entitled to any statutory or other indemnity for services performed in furtherance of the objectives of the WEPPA.

Neither the WEPPA nor the regulations provide liability protection for the accuracy or completeness of the information supplied. While insolvency professionals may reasonably expect that good‑faith and diligent conduct would shield them from liability, the legislation offers no explicit assurance. This stands in contrast to the express limitation of liability afforded to appeal board members and adjudicators acting in good faith under sections 14.1(4) and 32.51(4) of the WEPPA.

3. Computation of the claim:

As originally designed, the program provided benefits for unpaid wage claims arising from the bankruptcy or the receivership of an employer, capped at four times the maximum weekly insurable earnings under the Employment Insurance Act.

In 2009, the program was expanded to include severance and termination pay, and the maximum benefit was increased to seven times the maximum weekly insurable earnings. While this expansion was welcome, it raises two principal concerns:

• First, whether the current maximum benefit is sufficient to support employees who may face prolonged unemployment following an insolvency.

• Second, the absence of legislative guidance on how severance or termination claims should be calculated, leaving such determinations to vary significantly across jurisdictions and potentially depend on subjective assessments under applicable labour standards or common and civil law principles.¹² For illustrative purposes, if we consider only provincial labour standards laws, a claim for pay in lieu of notice could be as low as 1 to 8 weeks (in Alberta¹³), and as high as 1 to 42 weeks (in Ontario¹⁴).

4. Restructuring proceedings:

The program initially provided benefits only where an employer was bankrupt or in receivership. Stakeholders repeatedly raised concerns that excluding restructuring proceedings created an unjustified inequity, as employees terminated in restructurings face the same loss of employment due to insolvency as those affected by bankruptcies or receiverships.

In practice, some trustees adopted creative strategies to address this inconsistency, including the parallel appointment of a receiver in the context of a proposal proceeding, solely to force the application of the program. From a more socially palatable standpoint, these strategies can also be viewed as efforts to accommodate former employees who might otherwise have opposed a restructuring for the sole purpose of accessing program benefits, where bankruptcy would have yielded a more favourable outcome for them.

In response, legislative amendments in 2018 extended program coverage to employers undergoing restructurings under the CCAA or the BIA, and the legislation was renamed to reflect its broader application to insolvent employers generally, i.e. “An Act to establish a program to provide for payments to individuals in respect of wages owed to them by employers who are insolvent”.¹⁵

We were excited. The excitement did not last long.

In discussions with ESDC, we were consistently advised that the 2018 amendments extending the program to certain restructuring proceedings were not intended to apply to all employee terminations in restructurings. Rather, they were meant to cover only situations where a restructuring under the CCAA or the BIA effectively amounts to a full liquidation, with all employees being terminated (subject to limited exceptions for wind‑down activities). We remain of the view that limiting the application of the WEPP to restructuring cases involving the termination of all employees is fundamentally unfair and warrants reconsideration.

In a related but different context, the applicability of the WEPPA in a restructuring context involving a reverse vesting order (“RVO”) is currently before the courts in Quebec¹⁶. The Superior court held that the WEPPA applied where terminated employees’ contracts were transferred to a residual entity (“ResidualCo”), thereby engaging the program with respect to those employees.

The federal government appealed this decision, arguing that the RVO creates a legal fiction in which ResidualCo is not the true employer and that, in any event, the regulatory requirement that all employees be terminated in a restructuring is not met—reflecting the government’s view that the WEPPA should apply in restructurings only where they amount to a de facto full liquidation.

While the matter is now before the Court of Appeal¹⁷, judicial clarification alone is unlikely to offer a satisfactory resolution, as the issue ultimately calls for legislative reform to address the inherent unfairness of protecting only certain employees in insolvency proceedings.

Conclusion

In conclusion, while the WEPP is a useful and necessary mechanism to protect vulnerable employees, it remains a developing program that requires further refinement.

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¹ Jean-Daniel Breton is a retired chartered insolvency and restructuring professional, formerly with Ernst & Young Inc. in Montreal, and a former chair of the board of CAIRP. Emmanuel Phaneuf is a chartered insolvency and restructuring professional, Licenced Insolvency Trustee, partner at Raymond Chabot Grant Thornton and former member of the board of CAIRP. The views expressed herein are our own and do not necessarily reflect the views of our professional colleagues or coworkers.

² Jean-Daniel Breton, “Employee Protection in Insolvency Proceedings — Reviewing the Performance and Setting the Objectives” in Janis P Sarra, ed, Annual Review of Insolvency Law 2010 (Toronto: Carswell, 2011) 359; Jean-Daniel Breton, “WEPPA – What ails it and can it be fixed?” in Janis P Sarra, ed, Annual Review of Insolvency Law 2012 (Toronto: Carswell, 2013) 223; Philippe Bélanger and Jean-Daniel Breton, “Proposed Adjustments to the Wage Earner Protection Program Act,” in Janis P Sarra and Justice Barbara Romaine, ed, Annual Review of Insolvency Law 2015 (Toronto: Carswell, 2016) 251.

³ Jean-Daniel Breton, “WEPPA – What ails it and can it be fixed?” in Janis P Sarra, ed, Annual Review of Insolvency Law 2012 (Toronto: Carswell, 2013) 223.

⁴ An Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act and to make consequential amendments to other Acts, SC 2005, c 47.

⁵ An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act, the Wage Earner Protection Program Act and chapter 47 of the Statutes of Canada, 2005, SC 2007, c 36.

⁶ Wage Earner Protection Program Regulations, SOR/2008-222, as amended.

⁷ See sections 81.3 and 81.4 of the Bankruptcy and Insolvency Act, RSC 1985, c. B-3, as amended.

⁸ The initial coverage under the WEPP was limited to approximately $3,000, covered only wages (i.e. did not cover severance or termination pay), and the coverage could be unavailable for employees in certain circumstances, such as where the employer became bankrupt after an unsuccessful attempt at restructuring. Since of these problems have since been alleviated.

⁹ Supra, note 2.

¹⁰ Employment Insurance Act, SC 1996, c. 23, as amended.

¹¹ Companies’ Creditors Arrangement Act, RSC 1985, c. C-36, as amended.

¹² Along the same lines, differences could also result from unionized employee being entitled to termination benefits under a collective agreement.

¹³ See sections 54, 55, 56 57 and 137 of the Alberta Employment Standards Code, RSA 2000 c. E-9, as amended.

¹⁴ See sections 54, 57, 58, 61, 63, 65 of the Ontario Employment Standards Act, SO 2000, c. 41, as amended.

¹⁵ See section 626, Budget Implementation Act, 2018, No. 2, SC 2018, c. 27.

¹⁶ Arrangement relatif à Valeo Pharma Inc., 2025 QCCS 580, 2025 CarswellQue 5740.

¹⁷ Attorney General of Canada v. Valeo Pharma Inc., permission to appeal reported at 2025 QCCA 483, 2025 CarswellQue 3658.