What the Act says

The Act respecting labour standards contains provisions concerning the changes that may occur within an enterprise. These provisions protect the majority of Québec workers, whether they are full or part time.

Acquisition of an enterprise

The acquisition of an enterprise has no effect on the application of labour standards. The employment relationship remains as if no change had occurred.

Nor does a change of owners result in the cancellation of a claim, made under the Act respecting labour standards, which has not yet been settled. The former employer and the new employer are solidarily liable for such a claim. However, the old employer is not responsible for claims arising from facts that occurred after the acquisition of the enterprise.

In order for the Act to apply, the continuity of the operation of the original enterprise by the new employer must be demonstrated.

Business Bankruptcy

When a business declares bankruptcy, employees must take three simultaneous steps to try to recover the amounts they are owed.

Step one: with the Commission des normes, de l'équité, de la santé et de la sécurité du travail

The Commission des normes, de l'équité, de la santé et de la sécurité du travail has the authority, under certain conditions, to institute legal proceedings against the directors of a business that has declared bankruptcy. Employees who consider themselves aggrieved can file a complaint in order to collect the wages, vacation or holiday pay and indemnities for absences and family or parental leave owed them, with the exception of notices of termination of employment or collective dismissal. To allow the Commission to take legal action against the directors, the employee must submit proof of claim to the trustee in bankruptcy tasked with liquidating the business’ assets.

Step two: with the trustee in bankruptcy

While the Commission des normes, de l'équité, de la santé et de la sécurité du travail cannot claim amounts owed under notices of termination of employment or collective dismissal, the employee must indicate these on the proof of claim filed with the trustee in bankruptcy if he/she would like to recover these amounts.

To calculate the amount subject to these notices, if the employee is so entitled, use the formula below.

The amount corresponds to regular wages for a regular work week or more, which the employee would have earned had he/she worked during the written prior notice period. It may fall under individual dismissal or collective dismissal.If the employee is entitled to both indemnities, he/she may only claim the higher of the two.

How to calculate the indemnity for individual or collective dismissal

Regardless of the type of indemnity claimed (individual or collective), the amount is calculated as follows:

Notice not received (no. of weeks) × Average weekly wage = Amount owed the employee

Step three: with Service Canada

The federal government created the Wage Earner Protection Program (WEPP) for this purpose. It protects, up to approximately $3,646Footnote Reference;1,certain amounts owed to employees when the business for which they work declares bankruptcy or is subject to receivership. This amount covers wages, vacation pay and notices of termination of employment or collective dismissal owed by the employer.

Employees have 56 days from the date the business filed for bankruptcy (or was placed in receivership) to file a claim with the trustee in bankruptcy.

To determine if the employee is entitled to an indemnity under this program and for information about the application procedure, consult Service Canada’s Web site at http://www.servicecanada.gc.ca/eng/sc/wepp/index.shtmlCe lien ouvre dans une nouvelle fenêtre or call 1-866-683-6516.

Footnote 1Amount valid until in 2013.

Frequently asked questions

  1. What happens to employees when the enterprise that employs them is sold?
    Generally, an employee’s uninterrupted service is linked to the enterprise rather than to its owner.
    Uninterrupted service is part of the standards covered by the Act. For example, if an employee is credited with 2 years of uninterrupted service, he could exercise a recourse for a dismissal not made for good and sufficient cause even if the enterprise for which he worked has changed hands. However, the enterprise must not have changed vocations.

  2. Can an employee claim a notice of termination of employment or a notice of collective dismissal if the enterprise for which he worked has declared bankruptcy?
    No. The Commission des normes, de l'équité, de la santé et de la sécurité du travail can only claim wages from directors. Wages include all remuneration that may be earned by an employee, but exclude the notice of termination of employment or the notice of collective dismissal.

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