In response to the current economic challenges, such as foreign tariffs, the Ministry of Employment and Social Development Canada has developed new programs to support employers and employees. This article outlines the key benefits that are available during times of economic uncertainty, including situations where an employer is facing bankruptcy or receivership.
Work-Sharing Program (“WSP”)
The WSP came into effect on March 7, 2025, and will continue until March 6, 2026. This program helps both employers and employees avoid layoffs in circumstances where:
- There is a temporary decrease in the normal level of business activity; and
- The decrease is beyond the control of the employer.
The WSP includes a three-party agreement between the employer, the employee, and Service Canada, providing income support to workers eligible for Employment Insurance (“EI”) benefits while they work a temporary reduced work week. During this time, the employer will attempt to recover from factors causing decreased productivity, such as foreign tariffs.
The WSP has a minimum duration of six weeks and can last up to 26 weeks, with the possibility of an additional extension, bringing the total duration to 38 weeks.
New Temporary EI Measures for Employees
On March 22, 2025, the government announced new temporary EI measures for employees who are laid off or terminated due to the economic uncertainty caused by foreign tariffs. The EI measures include:
- Increased regional unemployment rates: The government will artificially inflate the regional unemployment rates that determine the approval and duration for EI benefits. The rate will increase by one percentage point in all EI regions, with no regions seeing an unemployment rate of less than 7.1%. This adjustment will reduce the number of hours required to qualify for regular benefits to a maximum of 630 hours and extend the duration of entitlement by up to four additional weeks.
- Faster access to EI benefits: Normally, EI benefits start the week of employment separation. Under the temporary measure, if the employee’s claim or the allocation starts between March 30, 2025, and October 11, 2025, earnings from separation will not be deducted, speeding up access for workers.
- Waiving the EI waiting period: The usual one-week waiting period for EI benefits will be waived, allowing workers to receive benefits during their first week of unemployment, providing faster support to the drop in income.
Wage Earning Protection Program (“WEPP”) for Employees
When an employer becomes bankrupt or subject to receivership, this could jeopardize an employee’s ability to recover wages, vacation pay, termination pay, or severance pay from the employer.
An employee whose employer has declared bankruptcy or entered receivership can apply for the WEPP program to receive a one-time payment of up to seven times the maximum weekly insurable earnings under the Employment Insurance Act, which is $8,844.22 for 2025.
If you are an employer or an employee seeking guidance about one of these programs including eligibility and application processes, please contact our team today.
Sources:
