Skip to main content

A Sears store is shown in Ottawa on Thursday, June 22, 2017. Lawyers representing workers at Sears Canada and the company have reached a deal to create a hardship fund for former employees.

The Canadian Press

Insolvent Sears Canada Inc. has agreed to set up a $500,000 "hardship fund" for the 2,900 employees who are losing their jobs but being given no severance.

The move comes amid a growing public outcry and critical comments on social media of how Sears was treating its laid-off employees. Some consumers were also calling for a boycott of the troubled retailer, which filed for court protection from its creditors on June 22. The money for the hardship fund will come from the $9.2-million retention bonuses set aside for Sears executives and certain employees to ensure they stay on board during the insolvency process to help restructure the retailer and keep it running.

But Sears employees who lost their jobs may find the $500,000, which represents about $172 an employee, a meagre sum. Workers would have collected far more had Sears followed the typical path of giving a few weeks of pay per year of service for terminated employees.

Story continues below advertisement

"The company shares everyone's concerns about the plight faced by some of its former employees, and is glad to see a solution, pending court approval, that can at least help those most in need," Sears spokesman Joel Shaffer said in an e-mail.

Ontario Superior Court will be asked on Friday to give a green light to the employee hardship fund into which up to $500,000 will be siphoned from the executive payments under the "key employee retention plan," the filings say.

Susan Ursel, lawyer at Ursel Phillips Fellows Hopkinson LLP, which represents employees, said the hardship fund is not meant to replace severance and termination pay and she remains in talks with Sears and the court-appointed monitor about other means of addressing those issues.  "It's meant to alleviate hardship according to the criteria," she said. "So in cases of medical or other urgent need the fund is available."

She said she and others who were involved in negotiating the agreement "are pleased at this kind of a response from the company in respect  of a serious issue of precarious hardship for some former employees."

The court also will be asked to wind up the Sears Canada pension plan and, in the meantime, continue paying monthly benefits.

Andrew Hatnay, a lawyer at Koskie Minsky LLP representing retirees, said as Sears runs liquidation sales to close 59 stores, it "does not appear to be restructuring.

"In these circumstances, we do not believe that any purchaser will agree to take over the liabilities of the Sears Canada pension plan and that the wind-up of the pension plan is inevitable." The pension plan is underfunded by $266.8-million on its wind up, according to the company.

Story continues below advertisement

Under Ontario pension laws, members of an underfunded pension plan can collect the amount owing and not paid by the employer to a pension plan on its wind-up, Mr. Hatnay said.

This "deemed trust" is a "vital remedy to help avoid pension benefit losses for members of an underfunded pension plan," he said in an e-mail. But under the insolvency proceedings, delays by Sears to wind up the pension plan could put plan members at risk, he said.

Under the hardship-fund agreement, employees who have been approved to receive a payment may receive up to eight weeks of wages, up to a maximum weekly amount of $1,200. The committee overseeing the fund will also be able to approve additional amounts, up to $2,500, in cases of medical and other emergencies.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter