The Hudson’s Bay Company (HBC) is facing flak for more than just lacklustre liquidation deals.
Driving the news: As part of its bankruptcy proceedings, HBC won’t pay severance to over 9,300 workers who are set to be laid off, but has earmarked up to $3 million in bonuses for 121 managers and execs as an incentive for them to stay on and manage the liquidation.
- In Canada, laid-off workers are considered unsecured creditors during a bankruptcy, meaning their severance is a lower priority than repaying secured creditors like financial institutions. With ~$950 million in debt, HBC has bigger fish to fry.
Big picture: A similar situation happened in 2017 when Sears went kaput, leaving workers with no severance and reduced benefits. The feds responded by passing an act in 2023 protecting pensions during bankruptcies, but it stopped short of guaranteeing severance pay.
Why it matters: While it makes sense to pay top brass so they don’t jump off a sinking ship, labour groups argue it’s an unfair situation for workers with inadequate government support.
Zoom out: Severance pay laws in other rich countries are more generous for workers. HBC’s plan might not be allowed in nations like France and Australia, where employee entitlements are given higher priority over other creditors than those in Canada.—QH