As Hudson’s Bay begins to liquidate most of its stores, documents reveal the retailer plans to give roughly 120 managers and executives a bonus — while confirming there will be no severance pay for more than 9,360 workers facing layoffs.
According to court documents filed ahead of the company’s appearance before an Ontario Superior Court justice last week, more than $3 million has been set aside to pay bonuses to 121 “key” employees, “whose continued service will be critical to the success of any wind-down or restructuring.”
The employees receiving bonuses are mostly store managers, along with nearly 30 executives and other non-store employees. In total, they make up just over one per cent of the more than 9,360 employees.
The bonuses will be paid by Sept. 30, if these employees’ services “are no longer required” before then, the court documents state.
Meanwhile, Hudson’s Bay’s remaining employees — who are facing all-but-certain layoffs in the coming weeks as the beleaguered retail chain starts liquidating all but six of its 96 stores under protection from the Companies’ Creditors Arrangement Act (CCAA) — will not receive severance pay.
“If employment is terminated by the company during the CCAA process (without cause), the company intends to pay wages and salary earned for services rendered up to an associate’s termination date,” Hudson’s Bay spokesperson Tiffany Bourré wrote in an email to the Star. “Severance will not be paid at termination.”
Bourré added that impacted staff could file a claim with the federal government under the Wage Earner Protection Program to try to obtain unpaid severance.
But employment lawyers who spoke to the Star stressed that these claims would amount to far less than employees could have expected normally, describing the situation as bad news.
“The bottom line is it’s a sad story,” Daniel Lublin, a co-founding partner of employment law firm Whitten & Lublin, said, “Employees are maybe going to get pennies on the dollar or no severance at all.”
While people are usually entitled to severance in normal circumstances, those rules “effectively go out the window” when a company files for creditor protection under the CCAA, explained Lior Samfiru, co-founding partner of Samfiru Tumarkin LLP.
Samfiru added that this could be particularly devastating for the “thousands of employees” who have spent years or decades working at the Bay, and could have expected up to 24-months worth of severance pay.
“Employees go from having clear severance rights to hoping for scraps,” Samfiru said.
According to court documents obtained by the Star earlier this month, Hudson’s Bay owes a total of $950 million to nearly 1,900 creditors, including landlords, fashion brands, banks and the Canadian government. Another $430 million is owed to secured creditors, or those who will be prioritized over its employees.
Beyond the Wage Earner Protection Program, unionized employees might also be granted protection under their collective agreement, Lublin added. Almost 650 of the Bay’s employees are unionized, according to court documents, with 598 of these workers based in Ontario.
During Friday’s hearing — where an Ontario Superior Court justice approved Hudson’s Bay’s liquidation plan — Andrew Hatnay, a lawyer representing employees, told the court he expects over $100 million in severance claims to be made.
Lublin said Hudson’s Bay could “do the right thing” and set aside money as part of its restructuring process to cover any unpaid wages or severance claims, but believes that won’t happen.
“It’s unlikely people will see any of that money,” he said.
