Former employees of Hudson’s Bay will receive crucial financial support as the beleaguered retailer has agreed to set aside over £5 million to address the loss of long-term disability benefits that were left uninsured. The deal comes as part of ongoing court proceedings following Hudson’s Bay’s insolvency, which was officially recognised in March 2025, after accumulating debts of £1.1 billion and facing cash flow problems.
Legal Action for Employee Support
The law firm Ursel Phillips Fellows Hopkinson LLP, representing over 9,300 former Hudson’s Bay workers, has filed a motion seeking court approval for the establishment of “hardship programmes” aimed at aiding those affected by the company’s collapse. This initiative will serve to provide financial relief to former employees, many of whom are in dire need of assistance after losing their jobs and benefits.
Previously, it was revealed that the company’s long-term disability benefits were not insured due to an “administrative services only” arrangement. This left employees at risk of losing their crucial benefits when Hudson’s Bay entered bankruptcy. Following the closure of the retailer in June, which involved the shuttering of multiple locations across Canada, the situation for those reliant on these benefits became increasingly precarious.
Proposed Financial Assistance Plans
The plan submitted this week, pending court approval, aims to offer lump-sum payments to the approximately 158 remaining recipients of long-term disability benefits. These payments will cover the benefits the employees would have received until May 2028, or until they turn 65, whichever comes first.
During negotiations, some former employees aged beyond 65 have already lost their entitlement to these benefits, heightening the urgency for a resolution. The court filing indicated that many recipients face significant hardships, expressing fears of losing housing or being unable to secure basic necessities without their benefits.
In addition to the disability support programme, the legal team is advocating for a fund that would provide one-time emergency payments of up to £9,600 for former employees experiencing severe financial difficulties. An additional £2,500 in discretionary funds may also be available for medical emergencies. This initiative, once approved, will allow individuals six months to apply for the support.
The Broader Implications
As Hudson’s Bay transitions to a numbered company following the sale of its brand to Canadian Tire Corp. Ltd., the situation for former employees remains dire. Many have lost not only their jobs but also health and dental benefits, life insurance, and severance pay. However, they are eligible to apply for government assistance through the Wage Earner Protection Program, which offers a maximum payout of £8,844.22 per individual.
The proposed financial support will be funded through a £9.9 million health and welfare trust associated with the defunct Zellers discount chain, alongside a £1.6 million reserve fund and a maximum of £250,000 from Hudson’s Bay’s remaining cash.
The collapse of Hudson’s Bay underscores a significant regulatory gap in the protection of employee benefits, particularly concerning long-term disability insurance. Despite proposed legislation in Ontario aimed at ensuring that companies insure such benefits, the bill was never enacted, leaving many workers vulnerable in times of corporate failure.
“While we share concerns that have been expressed by various parties that long-term disability benefits should be insured for all workers to protect against these kinds of serious hardships, we are pleased to be able to present this agreement for the Court’s approval,” stated lawyer Susan Ursel. “The programmes supported by this agreement will provide this group of vulnerable workers with financial security in the immediate term.”
Why it Matters
The ongoing developments regarding Hudson’s Bay’s insolvency not only highlight the immediate struggles faced by former employees but also raise critical questions about the adequacy of protections for workers in the event of corporate bankruptcy. As legislative frameworks remain insufficient, vulnerable individuals are often left without a safety net, emphasising the need for urgent regulatory reform to ensure that benefits are safeguarded against corporate failures. The outcome of these court proceedings will not only impact the lives of the affected workers but could also set a precedent for how employee benefits are managed in the future across Canada.
