Hudson’s Bay managers will get up to $3 million in bonuses, but workers get no severance

The iconic Hudson’s Bay Co. is facing tough times as it plans to close most of its 96 stores by the end of June. This decision has caused uproar among labour activists and workers, especially with the revelation that the company will pay up to $3 million in retention bonuses to 121 managers and executives, while not providing any severance to its more than 9,300 employees who will soon be out of a job.

Canadian Labour Congress president Bea Bruske has called the situation “incredibly egregious” and emphasized the need for the company to ensure that all workers receive some of the $3 million designated for bonuses. Kevin Grell, an employee at a Bay online distribution site in Toronto, expressed his dismay upon learning about the bonus payments, stating that it feels like a “kick in the ass” as he faces the uncertainty of potentially losing his job.

The decision to pay retention bonuses is a common practice in bankrupt or restructuring companies, as it aims to retain key staff crucial for implementing any reorganization plans. However, the lack of severance payments for laid-off workers has raised concerns and left many employees distressed. Hudson’s Bay spokesperson Tiffany Bourré confirmed that the company will not provide severance but assured that workers may receive financial support through Canada’s Wage Earner Protection Program.

Despite the financial assistance available, many workers like Grell are worried about the impact of losing out on severance payments, which would have helped with essential expenses. The situation is reminiscent of the Sears Canada bankruptcy in 2017, where employees faced similar challenges with reduced pensions and no severance pay. The backlash from that incident led to federal legislation in 2023 to improve protections for workers with defined benefit pension plans.

Labour activists are calling for stronger worker protections, including measures to ensure severance pay in bankruptcy cases. However, legal experts like Adrian Ishak argue that prioritizing workers over secured creditors in bankruptcy proceedings could deter lenders from providing essential financing for companies to thrive.

As Hudson’s Bay navigates its restructuring process, the fate of its employees remains uncertain. The lack of severance payments has left many workers in a difficult position, emphasizing the need for legislative reforms to protect workers’ rights in cases of insolvency. The ongoing debate underscores the importance of addressing these issues to safeguard the interests of employees in challenging times.