‘A cruel blow’: Union slams Hudson’s Bay for eliminating commission pay for some workers
Special to The Star
Hudson’s Bay will eliminate commissions for staff in the cosmetics departments and those earning commissions on big-ticket items like appliances starting April 20, according to a union release.
Hudson’s Bay has informed employees that it will eliminate commission-based pay for some employees starting April 20, a “concerning” move that employee lawyers say could be treated by workers as a termination.
The beleaguered retailer has unilaterally suspended commissions for staff in the cosmetics departments and those earning commissions on big-ticket items like appliances, according to a union press release. These workers will be paid a base salary instead, with HBC citing lower product inventory and declining sales as the reason for the change.
In an emailed statement to the Star, Tiffany Bourré, vice-president of corporate communications for HBC, said that “as Hudson’s Bay moves through the CCAA process, the company is adjusting to wage-based compensation for its associates going forward. All commissions earned prior to the effective date of April 20 will be paid in full to eligible associates.”
“This is a blatant violation of our members’ collective agreements and a cruel blow especially since managers have been rewarded with bonuses,” said Unifor national president Lana Payne in a press release Tuesday morning, adding that the union has filed a grievance against the move.
Unifor represents 595 of some 9,000 people employed by Hudson’s Bay, Saks Fifth Avenue and Saks Off 5th. Massive terminations are expected in the near future as the centuries-old retail chain has already liquidated all but six of its 96 stores.
“We’re talking about workers who’ve spent years working for this company, and now they’re being denied income they’ve rightfully earned and are entitled to,” Payne continued.
“To all of a sudden change compensation terms and conditions … to me, this appears to be designed to avoid paying people the types of compensation that they were entitled to during their employment,” said Daniel Lublin, an employee lawyer and one of the founding partners of Whitten & Lublin.
Lublin said that if employees have already received a notice of termination, it is a breach of employment standards legislation to slash commissions during the statutory notice period. If no notice of termination is given, employees could treat this as a termination, resign and “pursue damages for the constructive dismissal.”
The challenge, Lublin said, is that it’s difficult to obtain any type of severance compensation from the company because Hudson’s Bay is protected from lawsuits by the Companies’ Creditors Arrangement Act until the insolvency process is completed.
“This appears that the HBC is trying to take advantage of the workers in a particularly problematic way, and particularly problematic time,” said Lublin.
Lluc Cerda, employee lawyer and partner at law firm Samfiru Tumarkin LLP, said taking away “a substantial portion of income unilaterally” is not “something that they have the right to do unless the employee consents.”
The union’s grievance will proceed through arbitration, and if the grievance is deemed valid, the collective agreement will be enforced, and the commissions will be honoured, Cerda explained.
The court has granted Canada’s oldest company permission to give $3-million worth of bonuses to some 120 managers and executives “whose continued service will be critical to the success of any wind-down or restructuring” — while the retailer confirmed to the Star that no severance will be paid when other employees are laid off.
“This company is treating liquidation like a free-for-all where contracts and basic decency no longer apply,” said Unifor Ontario regional director Samia Hashi in the press release.
Hashi said workers should be the top priority during corporate insolvency and bankruptcy and called for stronger legal protections and enforceable penalties for companies that violate their rights.
On April 2, Hudson’s Bay issued the first round of termination notices to about 179 corporate employees, followed by an additional 93 notices six days later, according to a court document.
The department store has also terminated monthly payments to a retirement plan covering 304 current and former executives. The plan, which is funded in part by the Royal Trust Corporation of Canada and the rest by general corporate revenue, was suspended as a result of the company’s insolvency.
The windup of the executive retirement plan does not affect most Hudson’s Bay employees, who are participating in the company’s registered pension plan, which the company says, “is sufficiently funded and able to satisfy its liabilities.”
The retailer will return to court on Thursday morning to apply for an order appointing Ursel Phillips Fellows Hopkinson as the counsel to represent all current and former employees who are non-unionized.
While Hudson’s Bay looks to seek a restructuring solution that will save six of its stores and some employees, the company “anticipates further head-count reductions as a result of store closures over the coming weeks,” the court document read.