Fall of Hudson’s Bay will spur change for workers, labour groups, lawyers hope

Unifor National President Lana Payne poses for a photo in Toronto, Tuesday, Oct. 10, 2023. THE CANADIAN PRESS/Jessica Lee

TORONTO — When Hudson’s Bay employees rallied in front of two of the iconic retailer’s properties in late May, days before the retailer closed its doors for good, they knew there was no hope of saving their jobs.

Their goal instead was to encourage lawmakers to make the fall of the 355-year-old retailer — and all the failed companies that follow it — a little less painful for employees.

They argued that could be done if the government adopted their wish list of ideas ranging from boosting federal support programs to prioritizing workers rather than lenders when companies in creditor protection are repaying what they owe.

Such ideas were previously bandied around in labour circles when the Canadian divisions of Sears, Target and Nordstrom collapsed. This time, they’re hoping the momentum lasts.

“When you’re looking for these kinds of improvements, you will have ebbs and flows, but right now, we have an opportunity because the Bay situation is fresh in people’s minds” said Lana Payne, president of Unifor.

Her union orchestrated the rallies at one of the retailer’s distribution centres in Toronto’s Scarborough and another in front of a Windsor, Ont. store because Unifor represents about 595 of the 9,364 employees that worked at Canada’s oldest company before it filed for creditor protection in March.

The workers were told they will not get termination or severance pay and lost health, dental and life insurance benefits. A law firm representing them has warned that “given HBC’s significant amount of secured debt, it is not clear that employees will be able to recover any amounts owing to them directly from HBC.”

The company has blamed its troubles on the COVID-19 pandemic, depressed store traffic and tariffs. After it failed to attract investors that would keep the company alive, it started to sell off its remaining assets in hopes of recouping as much as possible for the thousands of creditors.

Back of the line

When Canadian companies file for creditor protection, the various groups owed money are often left to jockey for what little cash remains, knowing there usually won’t be enough to go around. Secured lenders are typically first in line because they have collateral backing the money they lent, often well before a company sought a reprieve from the courts.

In the Bay’s case there are 26 pages’ worth of creditors, including secured senior lenders Restore Capital, Pathlight Capital and Bank of America. They alone are owed hundreds of thousands of dollars and have started to recoup some of their losses because the Bay has been paying them with cash from its liquidation sales.

Employees are on the list of creditors, but they are not listed as secured and the amount owing is marked “TBD.”

“I think it’s pretty clear that workers are not the priority in these kinds of cases,” Payne said. “The legislation doesn’t make them the priority and workers right now are feeling the results of that.”

In the future, Unifor would like to see legislation changed so workers’ termination and severance claims are paid first, Payne said.

Susan Ursel, a lawyer representing Bay employees, agrees with the idea because “employees are affected in a personal way by their employer’s insolvency — losing their income and throwing their futures into uncertainty.

“Unlike sophisticated lenders, they are not able to negotiate security for the contractual promises of their employers and therefore fall behind those secured lenders in recovering money owed to them,” she wrote in an email.

“A legislative priority for employees would provide more certain and effective protection for employees, which we would welcome.”

But Sunira Chaudhri, founding lawyer at Workly Law in Toronto, worries that change would scare away lenders long before creditor protection is on the horizon and when companies still have a shot at recovery.

“If employees were to be first in line ... any employer that hired a lot of employees would be a bad bet for the banks,” she said. “You’d want to lend money to them the least, because you’d never be able to recoup on a loan.”

Jared Ong, an organizer with the Workers’ Action Centre, has heard that argument before. He doesn’t agree with it.

“Year on year, the major banks keep making billions more, but compare that to a worker who might be one or two paycheques away from losing a roof over their head,” he said.

Existing supports

Workers left without a job when their company goes under are typically able to lean on two federal government programs, but Ong said they need to be more generous.

The first is employment insurance, which pays employees out of work a portion of their salary while they look for a new job. To qualify, applicants must have gone without work and pay for at least seven consecutive days in the last 52 weeks.

The second is the Wage Earner Protection Program, which helps workers whose employees filed for creditor protection recoup owed wages, vacation, termination or severance pay.

Bay employees have until Oct. 26 to apply for WEPP, after an extension to their deadline was granted by Service Canada.

People who qualify under the program can earn up to $8,844.22 this year — a cap Unifor wants raised.

Nadia Zaman, an employment lawyer at Rudner Law, thinks a higher ceiling makes sense, especially for workers who have been with a company for a long time.

They generally wind up entitled to a lot more than WEPP’s cap, so the program puts them “essentially at a loss,” she said.

While many people don’t realize the program exists or understand some of the idiosyncrasies workers face when their company goes out of business, Zaman said the Bay is putting a spotlight on labour relations.

“A lot of people who haven’t personally been through the situation, they are becoming more aware of it,” she said, “And they are also looking for changes even if they haven’t been personally affected.”

The likelihood of turning that desire for change into actual change may seem “grim,” acknowledged Ong at the Workers’ Action Centre.

Labour activists have seen momentum turn into disappointment before.

For example, a 2014 Ontario bill pushing businesses to insure long-term disability benefits, so they’d be paid out even if an employer folded, passed, but was seemingly never enacted.

Change, said Ong, is “always a back-and-forth fight.”

“You win some things, you lose some things, government changes, but we need to keep pushing regardless of what happens.”

This report by The Canadian Press was first published July 7, 2025.

Tara Deschamps, The Canadian Press