The fall of HBC should be about change, not nostalgia. Taking care of its employees could have been part of its legacy

Back then, few of us were particularly surprised when subprime lenders took government bailout money and paid it to executives as bonuses. So why would we be surprised to learn that, amid creditor protection last month, the Hudson’s Bay Company (HBC) earmarked close to $3 million in executive/management bonuses while confirming it would deny its employees severance?

Because this is 2025. You would think things might have changed in the last 17 years.

At least HBC sales staff sticking it out to the end (knowing that severance is not forthcoming) could look forward to commissions from the liquidation sales, right? Of course not.

Documents from current HBC employees confirm that the latest move by the failing company to unilaterally remove commissions from sales staff eradicates one of their few remaining hopes as the company liquidates the vast majority of its locations. This erases thousands in earnings for hundreds of employees — earnings they were likely banking on given their grim outlook as their store closures approach.

The latest twist of the proverbial knife by HBC was unexpected by many on the heels of the management bonus announcement last month. A closer look reveals that this was always the plan.

In the normal course, an employer unilaterally depriving staff of existing sales commissions could constitute grounds for an employee to assert constructive dismissal, for which the courts could award damages equivalent to the employee’s severance entitlement. The employer has changed a fundamental term of your job, and the law treats it as a firing.

The risk of sales staff walking off the job and bringing constructive dismissal suits generally deters employers from implementing adverse changes to existing terms of employment. Indeed, I routinely caution employers against such sweeping measures without adequate notice for this very reason.

Unfortunately for HBC sales staff, creditor protection is not the normal course. Practically speaking, employees’ rights are only enforceable if the company can actually afford to pay them.

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.

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.

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

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.

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.

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).

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?

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.

Unless this issue is addressed with intention, I expect we will see reruns of this episode for years to come.