Hudson’s Bay to give $3 million in bonuses to managers — while confirming no severance pay for workers
Special to The Star
As Hudson’s Bay begins to liquidate most of its stores, documents reveal the retailer plans to give some 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, nearly $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 nonstore employees. In total, they make up just over one per cent of the more than 9,360 employees.
The bonuses will be paid in one-lump sum 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.”
The news comes as Hudson’s Bay posted 41 new jobs Wednesday for a “Fixed Term Sales Associate” position.
Twenty-four of these jobs are for stores in Ontario, with 10 in the GTA.
Of those around Toronto, one each are at the three locations spared from immediate liquidation: the flagship store on Yonge Street, the Yorkdale mall store and the Hillcrest Mall location in Richmond Hill.
The postings do not mention the creditor protection or liquidation, but promises a starting wage of $17.40/hour.
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,” said Samfiru, “to hoping for scraps.”
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.
Timothy Dunn, a restructuring and insolvency lawyer with the firm Blaney McMurtry, said the bonuses Hudson’s Bay plans to pay the group of 121 staff is not uncommon for a company attempting to pay back its creditors under the CCAA. These employees, he said, were likely identified as being essential to completing any restructuring plan.
“Looking at it from that perspective, if you are unable to implement that plan because the people who manage the employees who are necessary to implement it are no longer there, then you’re sort of doomed before you start,” Dunn said.
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.
Some employees in Unifor unions are entitled up to $35,000 in severance under their collective agreement, Unifor national president Lana Payne said in a press release Wednesday.
“It’s disgraceful, enraging, and outrageous. This is corporate greed at its worst and shows how fundamentally unfair this process is for the very workers who kept this company going,” Payne continued. She added that Unifor is urging all levels of government to take action to ensure workers aren’t “treated as afterthoughts” during the liquidation.
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.
In a press release Wednesday morning, NDP Leader Jagmeet Singh described the news as “corporate exploitation.”
“This is exactly what happens when we let billionaires run the show,” said Singh. “When the people who built these companies get tossed aside and the ones at the top get richer — that’s not just wrong, it’s a choice.”