Author: Gregory Gehlen
In British Columbia, directors and officers of corporate employers face personal liability for unpaid wages owing to employees under the provincial Employment Standards Act. This includes liability for termination pay where employees are laid off other than for just cause.
How much termination pay are officers and directors liable for and when are they not liable?
This liability is limited in two important respects. First, directors and officers are liable for wages – of any kind, including termination pay – only up to an amount equal to 2 months’ wages for each employee.
Secondly, liability for termination pay does NOT apply if the employer is in receivership or is in a formal insolvency proceeding such as bankruptcy. If receivership or insolvency proceedings make sense for other reasons, they can also have the benefit, from the point of view of a director or officer, of removing personal liability for termination pay.
Advice is critical to determine liability
For a troubled business, the personal interests of the directors and officers are just one set of many considerations which must be brought to bear. Experienced advice is critical in deciding what course to follow. Reach out to Gehlen Dabbs if you need assistance.