Howard Levitt: Stiffing employees is a blight on Hudson’s Bay legacy

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When your employer is on the brink of insolvency, by the time you have your day in court there is typically nothing left to recover. This is because employees become unsecured creditors, placed behind banks, landlords and restructuring firms. They are lucky if they see a few cents on the dollar. Severance? Vacation pay? Commissions deprived and therefore owed? Not a chance, even if a court agrees you were wronged.

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The jilting part of it all is where the money is actually going. The leadership team — often the very people who presided over the company’s decline — not only have their compensation protected, but often enhanced, to ensure they stick around and guide the company through its palliative days. Laden with retention bonuses and restructuring incentives — justified, apparently, as “necessary” to retain “key employees” during turbulent times — leadership emerges generally unscathed.

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The question remains: why should those who steered the ship into an iceberg be rewarded while the deckhands are left in the freezing water?

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This is not hypothetical. We saw it happen with Sears Canada Inc., Bed Bath & Beyond Inc. and Nordstrom Inc. (to name just a few recent instances). Now we see the same story at HBC: corporate management lands softly while the rank-and-file are left scrambling.

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Someone should do something, right?

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Cue the underwhelming federal Wage Earner Protection Program (WEPP), which is meant to offer a last resort for workers in this situation. It pays out unpaid wages, vacation pay and severance — up to a maximum of just over $8,000, which hardly bridges the gap. While this may help an employee who merely lost a few weeks’ wages, for someone owed six figures in severance after 15 or 20 years of work, the WEPP barely moves the needle.

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If serious about protecting Canadian workers, perhaps it is time to reimagine how employee entitlements are treated in insolvencies. Employees’ statutory entitlements under employment standards legislation could be elevated in priority, such that they get paid something before other creditors, not after (when nothing is left).

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Better yet, companies could be required to set aside statutory entitlements and vacation pay in protected trust accounts, untouchable by non-employee creditors in the event of bankruptcy. If you are collecting EI, CPP and tax deductions off each pay cheque, why not simultaneously secure those basic legal entitlements?

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HBC was once a national icon. Its decline is sad, and it’s made sadder by what is happening behind the scenes. The fall of HBC should not be about nostalgia; it should be about change. Taking care of its employees could have been part of its legacy.