The Wage Earner Protection Program Act (the “WEPPA“) which allows the government to pay workers up to $3,000 in owed wages immediately from general federal revenues, came into effect on July 7, 2008. At the same time, the Bankruptcy and Insolvency Act (“BIA“) was amended to give higher priority, above secured creditors, to unpaid wages of up to $2,000 in bankruptcy situations. The government is entitled to rely on the $2,000 super priority under the BIA to recover any monies paid under WEPPA.
The B.C. Supreme Court recently had to consider whether the meaning of “wages” under the WEPPA includes benefit payments to third parties (e.g., benefit payments to a health and welfare trust or union dues).
The issue arose when a unionized company was placed into receivership. The receiver took the position that only amounts directly payable to the employee should be considered wages and that amounts payable to third parties (i.e., such as union dues or benefit payments) should not be included.
The Court disagreed. It found that the definition of “wages” under WEPPA which defines wages as including “compensation for services rendered” could not be limited only to compensation earned by an employee which is due to be paid directly to the employee. Rather, the definition of wages was broad enough to encompass amounts earned by the employee and which were directed to be paid to any third party by the employee directly or pursuant to a contract such as a collective agreement.
(Click here for link to Decision)