A three-year campaign by the Canadian Labour Congress (CLC) and its affiliates ended successfully in mid-December with Canada’s workers winning new legal protections when their employer goes bankrupt.

The new protections are the result of passage of Bill C-12, which amends existing insolvency and wage protection laws that unfairly put workers last in line to get paid in bankruptcy.

According to the CLC, working men and women lost an average of $50 million a year in unpaid wages when companies went bankrupt. The workers would have to wait for two years and then be provided only 15 cents on the dollar of their money. Without this act, workers would continue to suffer the loss of wages, benefits and even their pension savings because banks and other creditors are given priority.

Protection

Among other things, the new law creates the Wage Earner Protection Program (WEPP) which provides for the payment of unpaid wages, unpaid pension contributions and earned vacation pay of up to an amount equaling four weeks’ maximum insurable earnings under the Employment Insurance Act (or appropriately $3,000 at this time).

“Finally, workers no longer have to fear the prospect of lost earnings owed to them while dealing with the blow of the loss of their jobs,” said Ken Georgetti, President of the CLC.

In addition, the Act protects workers’ collective agreements from unilateral changes by bankruptcy judges. Too often in the past, judges have significantly reduced wages, benefits and other provisions in collective agreements. Under the new law, changes can only be made with the union’s consent – an important protection.

“Canadians have been waiting a long time for these protection measures. It is not just unionized workers who will benefit but every working woman and man in Canada – whether they are in a union or not – who will have this protection,” said Georgetti.