Q: I work for a company that is being impacted by U.S. President Donald Trump’s tariffs and I’m worried about my future. What rights do I have as an employee if my company goes bankrupt or seeks insolvency protection?
A: Employees’ rights are limited once a company goes bankrupt or files for protection under the Companies’ Creditors Arrangement Act (CCAA).
It is no secret that when a company is in significant financial trouble, terminations typically follow.
This means employees can lose their severance and termination pay without proper notice or pay in lieu.
Companies’ Creditors Arrangement Act (CCAA)
The CCAA is a federal law reserved for corporations that owe creditors more than $5 million.
Once an application is accepted, the court issues an order that generally protects a company from being pursued by its creditors for 30 days, with a possibility of an extension.
Your job security is legally protected while on leave, writes Soma Ray-Ellis, and you have the
The point of these protections is to allow a company time to put in place a proposal or plan toward payment of its debts.
During this period, a company can continue to operate, pay its employees, and provide services to its customers with the goal of emerging as a sustainable business.
However, if a company fails to restructure, or opts to liquidate, all employees effectively become what is referred to as unsecured creditors and will usually be terminated.
Secured creditors such as banks are paid first, and there will often not be money left over to pay employees their appropriate severance, termination pay, benefits, and sometimes even their outstanding wages.
The CCAA also blocks these employees from suing for lost wages or severance, which can add to overall anxiety and uncertainty.
We see this in the case of Hudson’s Bay’s recent closure, when union-led rallies took place in Windsor and É«É«À², calling for insolvency reform, and for lost wages to be paid out.
Normally in these circumstances, an employee representative counsel is appointed to represent impacted employees during a CCAA proceeding.
The lawyer’s role is to negotiate possible severance, termination pay and update employees on legal developments in court.
Employees can opt out of this representation within a certain time frame and obtain their own lawyer if they so choose.
Wage Earner Protection Program (WEPP)
Employees may be eligible to receive a payment under
It supports employees whose employer filed for bankruptcy, employees impacted by certain CCAA proceedings or Bankruptcy & Insolvency Act proposals, as well as employees who have lost their job and their employer owes them wages (vacation, termination, or severance pay).
Through this program, employees are able to receive a one-time payment of up to an amount equivalent to seven times the maximum weekly insurable earnings under the Employment Insurance Act.
Terminating an employee for simply having body odour without progressive discipline is likely
The maximum payment for 2025 is $8,844.22.
Keep in mind, this amount typically only covers a fraction of what employees are owed overall.
The .
Apart from WEPP, historically some companies facing insolvency and bankruptcy have established funds and created trusts to help their employees collect severance and termination pay.
Additionally, Ontario’s may protect some of your benefits if:
• you were employed in Ontario
• have a defined benefit pension plan, and
• there isn’t sufficient funds in the plan to pay your benefits.
If your pension is fully funded and is separate from your employer’s assets, it is likely protected.
Court-appointed or sought out legal representation can help outline all of your options.
To join the conversation set a first and last name in your user profile.
Sign in or register for free to join the Conversation