Financial Difficulty & Bankruptcy - Information for Employees

Note: The Labour Standards Division may be able to help you if your employer is insolvent, but cannot recover wages on behalf of an employee if the company is bankrupt. If your employer is bankrupt or in receivership, the Wage Earne Protection Program (WEPP), a program enforced though Service Canada, may be able to help you recover your wages.

The information listed here is designed to help you find out what to do if your employer has ceased operating due to bankruptcy or insolvency.

Insolvency:

A company is insolvent if it does not have enough assets to cover its debts, or is unable to pay its debts when they are due.

An insolvent employer may cease operating because they are unable to get credit, their utilities are cut off, or the landlord has locked the business out for not paying rent.

Bankruptcy:

When a business voluntarily applies for bankruptcy through the Official Receiver under the federal Bankruptcy and Insolvency Act, or

When a business is forced into bankruptcy by creditors asking a court to declare the debtor bankrupt

When an employer enters into bankruptcy, the court orders a stay of proceedings barring all employees from collecting money that is due and preventing the Labour Standards Division from issuing an order to pay money. The employee, or any other creditor, may go to the court and seek permission to proceed, however it is much more efficient if the employee goes directly to the Trustee in Bankruptcy and files a claim for pay.

The Wage Earner Protection Program (WEPP) provides payment to eligible employees for wages owed to them by employers who are bankrupt or subject to a receivership. Applicants need to contact Service Canada to apply.

There are time limits for filing a claim for pay under the bankruptcy process. If your employer is bankrupt you should file a claim as soon as possible.

If your employer is not bankrupt:

1. Make a list of all money owed to you by the employer, including:
   • Regular wages (both the dollar amount and when you worked, broken down into time and date)
   • Annual vacation pay
   • Any other monies owed to you by the employer
   • Documentation showing how long you were employed (employment records)
2. Keep all pay statements and other records that can prove you were an employee and that wages are owed to you
3. File a complaint with the Labour Standards Division.

How do I find out if my employer is bankrupt?

To find out if your employer is bankrupt, ask your employer for the contact information of the Bankruptcy Trustee. This person is responsible for ensuring all creditors, including employees, receive information about the money owed to them. The Trustee in Bankruptcy will provide all necessary information, claim forms, etc.

The Bankruptcy Trustee will provide each creditor with a Statement of Affairs indicating the available assets of the corporation and the debts owing. Unfortunately, there is no guarantee that employees will receive any of the money that is owed to them.

Can I get EI Benefits, or help finding another job?

Your local Human Resources and Social Development Canada (HRSDC) Office will assist you in filing for EI or in a job search. You will find them listed in the blue pages of the telephone book.

Will the Labour Standards Division help me recover my Record of Employment or give me a T-4 for my income tax return?

No. If you have not received a Record of Employment from your employer, contact Human Resources and Social Development Canada (HRSDC). Contact Canada Revenue Agency if you have not received a T-4 slip.

If you cannot reach your employer or the Trustee in Bankruptcy, you can contact:

Office of the Superintendent of Bankruptcy
Maritime Centre
1505 Barrington Street, 16th Floor
P.O. Box 940, Station M
Halifax, Nova Scotia
B3J 2V9

Telephone: (902) 426 - 2900
Fax: (902) 426 - 7275