BANKRUPTCY AND OUTSTANDING WAGES - WHAT TO DO
Ed Canning Jul 17, 2004
QUESTION: I have worked for a company for the last 10 years and the company is presently in dire financial circumstances. Our pay cheques have been late a few times and it seems like the bank may foreclose at any minute. Right now, I am owed an unpaid guaranteed bonus that was due 2 months ago as well as 3 weeks of outstanding vacation pay. If the company goes bankrupt, how can I get this money?
ANSWER: Whether the directors of the company you work for know it or not, they are personally responsible for your outstanding wages and vacation pay if the company cannot pay it because of bankruptcy. Those wages cannot exceed 6 months. The bonus you referred to, if it was guaranteed, is considered wages by the
Employment Standards Act. If the company goes bankrupt, you should immediately file a claim with the Trustee in Bankruptcy and file a complaint with the Ministry of Labour for those unpaid wages. Unless the directors of the corporation have no assets, you will end up being paid sooner or later.
The bad news is that directors are not personally responsible for termination or severance pay under the
Employment Standards Act. While you will get your outstanding wages and vacation pay, you will not receive any pay in lieu of notice as required by the Act unless there is money left over after the bank is paid. There is rarely any money left over after the bank has seized the assets. Hopefully, you are vigorously searching for a new job.
As published in the Hamilton Spectator, July 8, 2002