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Wage Earner Protection Program

May 6 2005 - The Government of Canada has announced its intention to establish a Wage Earner Protection Program. This program is intended to help protect workers by providing a guaranteed payment of wages owed up to $3000 should their employer declare bankruptcy.

Under the present bankruptcy system, workers' claims for unpaid wages rank after secured creditors. Consequently, many employees have to wait from one to three years to get a small portion of the wages owed to them - 13 cents on the dollar on average. These workers are often the most vulnerable and working in low-wage jobs in small businesses (under 10 employees) in the construction, retail and food services sectors. Under the proposed program, affected workers could make their wage claim immediately and should receive their money about six weeks later.

"This program is about fairness and helping the most vulnerable workers. The Wage Earner Protection Program will ensure that workers get their wages quickly, when they need it most. It will also ensure that payment of wages will no longer depend solely upon the amount of assets in employers' estates," said Joe Fontana, Minister of Labour and Housing.

"There is a need to address a number of issues related to employees and businesses that suffer bankruptcies or insolvencies," said Toni Valeri, Leader of the Government in the House. "Our Government has put forward an ambitious legislative agenda that reflects the priorities of Canadians. We want to ensure workers do not face undue hardship if the business or enterprise, where they are employed runs into difficulty."

"The Government recognizes that the present insolvency system lacks an effective mechanism to provide certain and timely payment of the wages owing to workers whose employers go into bankruptcy or receivership under the Bankruptcy and Insolvency Act," said Industry Minister David L. Emerson. "The Wage Earner Protection Program is designed to remedy this gap and to form part of a comprehensive insolvency reform package, which I intend to introduce this spring."

"Meeting the needs of workers is important to the health, well being and financial success of Canadians and is critical to the Government's efforts to build a 21st century economy. The WEPP and the planned insolvency reforms will help the Government strike the proper balance between the protection of workers and other creditors, all of whom suffer in the unfortunate instance of a bankruptcy," concluded Minister Fontana.

See also  Employee Rights During Bankruptcies

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