If your employer in Nova Scotia goes bankrupt, you are considered an ‘unsecured creditor,’ making it hard to get severance directly from the company. However, the federal Wage Earner Protection Program (WEPP) provides a payment of up to approximately $8,500 CAD to cover unpaid wages and severance.
When a business in Halifax or New Glasgow shuts its doors due to insolvency, employees are often left wondering if they will ever see their final paycheque or severance. 🏭 Bankruptcy is a complex federal and provincial legal process. While the company itself may have no money left to pay you, the Canadian government has a safety net designed specifically for this situation.
The Wage Earner Protection Program (WEPP)
Generally, WEPP is the primary way workers in Nova Scotia recover lost income during a bankruptcy. It is a federal program administered by Service Canada. 🇨🇦 It covers unpaid wages, earned vacation pay, and the severance/termination pay you would have been entitled to under the Nova Scotia Labour Standards Code.
Step-by-Step Recovery Process
If your workplace has been placed into receivership or bankruptcy, follow these steps to secure your payment. 📍
Step 1: Identify the Trustee in Bankruptcy
When a company goes bankrupt, a licensed “Trustee in Bankruptcy” is appointed to manage the assets. 🧐 They are responsible for providing you with a WEPP information sheet and a statement of what the company owes you. If you don’t know who the trustee is, check the notice posted on the business door or contact the Office of the Superintendent of Bankruptcy.
Step 2: File a Proof of Claim
You must file a “Proof of Claim” with the Trustee. This is a formal document where you state exactly how much you are owed for wages and severance. 📝 In Nova Scotia, the Trustee will verify these figures against the company’s books.
Step 3: Apply to WEPP via Service Canada
Once you have the information from the Trustee, you must apply for WEPP online through the Service Canada website. 💻 You must do this within 56 days of the date the employer’s bankruptcy or receivership started. If you miss this deadline, you may lose your right to the payment.
How Much Can You Recover?
WEPP does not cover everything, but it provides a significant amount for most workers. 💵
- Maximum Payment: As of 2026, the maximum is approximately $8,500 CAD (the amount is tied to 7 times the maximum weekly insurable earnings for EI).
- What is Covered: Unpaid wages from the 6 months before the bankruptcy, vacation pay, and severance pay.
- What is NOT Covered: Bonuses, expenses, or severance amounts that exceed the WEPP cap. For those, you remain an unsecured creditor and may receive pennies on the dollar if the company’s assets are sold.
Timeline for Receiving Money
The WEPP process is generally faster than waiting for the bankruptcy court to finish. ⏱ Once your application is submitted and the Trustee has confirmed your earnings, Service Canada typically issues payment within 30 to 60 days. In contrast, the full bankruptcy process for a large company in Nova Scotia can take years.
Frequently Asked Questions (FAQ)
What happens to my pension if the company is bankrupt?
In Canada, most pension funds are held in trust and are separate from the company’s assets. This means they are usually protected from the company’s creditors. 👴
Am I still eligible for EI if I get a WEPP payment?
Yes, but the WEPP payment for wages may be considered earnings for EI purposes, which could slightly delay the start of your EI benefits.
What if I am a contractor, not an employee?
Unfortunately, independent contractors are usually not eligible for WEPP. They must wait as unsecured creditors to see if any money remains after the secured creditors (like banks) are paid. 🚫
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