Recent legislative changes to the WEPP

• What legislative changes have been made to the WEPP?
• When will these changes be in force?
• What is the definition of termination pay?
• What is the definition of severance pay?
• What are the trustees'/receivers' obligations?
• What are the employees' obligations?
• Are trustees/receivers required to provide a new or amended Trustee/Receiver Information Form?

What legislative changes have been made to the WEPP?

Amendments to the WEPP legislation include the following:

• Extending the scope of ''eligible wages'' under the WEPP to include termination and severance pay for employees terminated in the period commencing six months prior to the date of bankruptcy or receivership;
• Ensuring consistency of the usage of the term ''eligible wages'' throughout the WEPP Act and the WEPP Regulations;
• Clarifying the reasons for the end of the employment, including eliminating the seven (7)-day gap currently in the termination of employment provision;
• Clarifying the eligibility criteria;
• Ensuring consistency between the French and English versions;
• Revising the order of payment allocations to include termination and severance pay;
• Granting 10 more days (increased from 35 to 45 days) to trustees and receivers to provide the prescribed information to the Minister and to the individual; and
• Granting trustees and receivers a possible extension to provide the prescribed information when circumstances beyond their control necessitate a longer period.

When will these changes be in force?

The above amendments to the WEPP are effective as of March 12, 2009, the date the legislation came into force and are retroactive to January 27, 2009.

What is the definition of termination pay?

In most cases, when employment is terminated, an employer must provide the employee with either of the following:

• Written notice of termination (generally determined by how long someone has been employed by an employer);
• Termination pay (lump sump payment equal to the regular wages for a regular work week that an employee would otherwise have been entitled to during the written notice period); or
• A combination pursuant to relevant employment standards legislation.

Federal, provincial and territorial jurisdictions in Canada all have provisions relating to individual termination pay, which vary by jurisdiction. Many jurisdictions also provide for group or collective termination pay depending on the circumstances.

For more information with respect to termination pay, you may wish to consult your federal or provincial/territorial Employment/Labour Standards offices.

General information can be found on the Labour Program Web site, under Termination of Employment at:

Termination of Employment
Employment Standards Legislation in Canada

What is the definition of severance pay?

Severance pay is compensation paid to qualified employees whose employment has been "severed", and is characterized by the following:

• Compensates an employee for loss of seniority and recognizes an employee's long service.
• Differs from termination pay, which is given in place of the required notice of termination of employment.
• May be statutory or may be found in the provisions of a collective agreement in unionized workplaces.
• Some jurisdictions explicitly provide for severance pay.

What are the trustees'/receivers' obligations?

• Trustees and receivers will continue to provide Service Canada with the Trustee Information Forms, which set out the amount of wages owing to each individual employee. Under the amended legislation, this information now includes amounts for severance pay and termination pay. Changes have been made to the Trustee/Receiver Information Form to reflect the new amendments.
• Trustees and receivers will trigger the retroactivity process by submitting a new or amended Trustee/Receiver Information Form (read further on) for a bankruptcy or receivership which took place during the period between January 27, 2009 and March 12, 2009, the date the legislation came into force.

What are the employees' obligations?

• For the period between January 27, 2009 and March 12, 2009, the date the legislation came into force, employees who have already submitted an application under the WEPP for wages and vacation pay owing will not need to submit a new application to claim any severance or termination pay owing as that information will be provided by the trustee. However, employees may need to provide a revised proof of claim to their trustee to include any amounts for termination and severance pay.
• Employees who have not already submitted a WEPP application will need to submit an application to the WEPP for the period between January 27, 2009 and March 12, 2009, the date the legislation came into force if their former employer became bankrupt or subject to receivership during that period and if, as a result of the coming into force of the new amendments, they are now owed termination or severance pay for which they are entitled to submit an application under the WEPP.
• Changes have been made to the WEPP application form for employees to reflect the new amendments.

Are trustees/receivers required to provide a new or amended Trustee/Receiver Information Form?

• An amended Trustee/Receiver Information Form will be required for applicants for whom the trustee has already submitted a Trustee Information Form during the period between January 27, 2009 and March 12, 2009, the date the legislation came into force, for less than the maximum entitlement under the WEPP and if employees are now eligible for severance pay and/or termination pay under the WEPP.
• A new Trustee/Receiver Information Form will be required when the person was not previously "entitled" to WEPP payment, but now becomes entitled to claim for severance and/or termination pay as a result of the amended legislation.
• A new or amended Trustee/Receiver Information Form is not required where there are no amounts owing to the employee for wages, vacation, termination or severance pay or other amounts prescribed under the WEPP legislation.
• A new or amended Trustee/Receiver Information Form is not required where the trustee has already paid the applicant the full WEPP maximum of four weeks insurable earnings under Employment Insurance (approximately $3,253) to compensate for wages, vacation pay, termination pay, severance pay or other amounts owing.