Sears Canada Employees Confirm Severance, Benefits and Pensions Cut

    June 29, 2017

    With the financial well-being of thousands of former Sears Canada employees left in tatters, Employment and Labour Law Firm Samfiru Tumarkin LLP is urging the federal government to make legislative changes to better protect employees.

    Since Sears Canada filed for creditor protection one week ago, Samfiru Tumarkin LLP has been contacted by frustrated past and present long service employees.

    Those employees who had previously accepted severance terms from the retailer in the form of salary continuance (when severance pay is provided over a course of months rather than in one lump sum) have informed us that Sears has stopped paying the agreed upon severance.

    Letters from Sears Canada have been issued to former employees, informing them that as of June 22nd 2017, in association with the Companies' Creditors Arrangement Act proceedings, Sears Canada has ceased paying severance. Participation in the company's group benefits and pension plans have also been halted. These former employees are being encouraged by the retailer to make arrangements to replace their benefit coverage as they deem fit.

    One individual, who had worked for Sears Canada for 35 years and was owed another 20 months' severance pay, received the same letter. In a live phone call to The Employment Hour , he told Employment Lawyer Lior Samfiru that retirees are losing not only their health and dental benefits, but also specific pension amounts as well.

    "I've been getting calls every single day, several times a day, from Sears employees existing and former," says Samfiru. "Unfortunately, Sears Canada is under this blanket of protection, which means you can't do anything to them. Sears employees are left holding the bag."

    Terrible Scenario Can Be Avoided in the Future

    Due to the fact that Sears Canada is under creditor protection, employees cannot take legal action against Sears to recover their losses. Bankruptcy laws protect a struggling company and allow it to favour its secured creditors (banks) over employees. This terrible scenario can only be avoided by changes in legislation in one of two ways:

    1. Making employees secured creditors with respect to their severance and pension entitlements. This will ensure that employees are at the "front of the line" when a company is in bankruptcy proceedings.
    2. Making officers and directors of a company personally liable for employees' severance entitlements. Currently, officers and directors are only personally liable for unpaid wages of employees, but not for severance. If they were made personally liable, it is very likely that the Sears scenario would have had a different outcome.

    Samfiru Tumarkin LLP