Hudson’s Bay filed for creditor protection in March 2025 after losing $329.7 million and owing over $2 billion in debt. The iconic retailer has since announced layoffs affecting over 8,300 employees by June 1, 2025, making this one of Canada’s largest retail bankruptcies.
If you’re a Hudson’s Bay employee facing job loss, understanding your rights and available protections is crucial.
What Happens to Employees When a Company Files for Bankruptcy?
When Hudson’s Bay filed for creditor protection under the Companies’ Creditors Arrangement Act (CCAA), several immediate changes affected employees:
Immediate Impact
- A court-ordered stay of proceedings prevents employees from suing the company for unpaid wages or severance while the CCAA process is ongoing
- Employment may continue temporarily while the company restructures
- Layoffs and store closures become likely as the company downsizes
- Employee benefits and pension contributions may be affected
Your Legal Status
During bankruptcy proceedings, employees face uncertainty but retain certain rights:
- Right to file claims for unpaid wages and severance
- Priority status for certain wage claims
- Access to government protection programs
- Continued employment until formally terminated
What Happens to Employees When a Company Files Chapter 11?
While Chapter 11 is a U.S. bankruptcy provision, Canadian companies like Hudson’s Bay file under the CCAA, which serves a similar purpose:
Restructuring vs. Liquidation
- CCAA Protection: Allows companies to restructure debts while continuing operations
- Liquidation: Hudson’s Bay received court permission to liquidate all but six stores starting March 24, 2025
- Employee Impact: Most employees face termination as operations wind down
Key Differences from U.S. Chapter 11
- Canadian proceedings prioritize certain employee claims
- Wage Earner Protection Program provides additional security
- Provincial employment standards still apply where possible
What Is the Rule of Thumb for Severance Pay?
The traditional rule of thumb for severance pay is one month per year of service, but this varies significantly based on several factors:
Factors Affecting Severance
- Age and Length of Service: Older employees with longer tenure typically receive more
- Position Level: Management and senior roles often get enhanced packages
- Industry Standards: Retail employees may receive different treatment than executives
- Economic Conditions: Bankruptcy can limit available funds for severance
Hudson’s Bay Specific Considerations
- Bankruptcy may limit severance to statutory minimums
- Court proceedings may delay or reduce traditional severance payments
- Priority goes to wages owed before severance payments
- Common law entitlements may be compromised in insolvency
How Long Do I Have to Sign a Severance Agreement?
The timeframe for signing severance agreements depends on your situation:
General Timeline
- No Legal Minimum: Employers aren’t required to give specific time limits
- Reasonable Time: Courts expect employers to provide reasonable consideration time
- Typical Range: Most agreements allow 7-21 days to review and sign
- Legal Advice: You’re entitled to consult with a lawyer before signing
Bankruptcy Considerations
- Severance offers may be limited or non-existent
- Pressure to sign quickly due to company’s financial constraints
- Court-imposed deadlines may affect timing
- WEPP applications have stricter deadlines than severance agreements
Before Signing
- Calculate what you should receive under employment standards
- Consider your potential WEPP entitlements
- Review any employment contract provisions
- Don’t feel pressured to sign immediately
Download 7 Crucial Steps Before Signing Any Documents
Employee Protection Program (WEPP)
The Wage Earner Protection Program (WEPP) provides payment of outstanding eligible wages if your employer is bankrupt, subject to receivership, or owes wages, vacation pay, termination pay, or severance pay. Employees can receive up to $8,844.22 for 2025.
WEPP Coverage
Eligible Payments:
- Unpaid wages for work performed
- Vacation pay owed
- Termination pay (notice pay)
- Severance pay up to program limits
Maximum Benefits:
- Up to 7 times the maximum weekly insurable earnings under EI ($8,844.22 for 2025)
- Covers wages earned in the 6 months before bankruptcy
- One-time payment per bankruptcy
How to Apply for WEPP
- File Proof of Claim: Submit a written statement during bankruptcy proceedings to confirm your employer owes you eligible wages
- Application Deadline: Complete forms within 57 days of bankruptcy or receivership date
- Required Documents: Employment records, pay stubs, Record of Employment
- Processing Time: Applications typically processed within 12 weeks
WEPP Application Process
- Contact Service Canada for application forms
- Work with the bankruptcy trustee to verify claim amounts
- Submit all required documentation promptly
- Follow up on application status regularly
Protecting Your Interests as a Hudson's Bay Employee
Immediate Steps
- Document Everything: Keep all pay stubs, employment records, and communications
- File Employment Claims: Submit proof of claim through the bankruptcy trustee
- Apply for WEPP: Don’t miss the 57-day deadline
- Seek Legal Advice: Consult with an employment lawyer about your rights
Financial Planning
- Apply for Employment Insurance immediately after termination
- Budget based on WEPP maximum rather than full severance expectations
- Consider retraining programs available through government assistance
- Explore other employer benefits like extended health coverage
Employment Standards Protection
- Provincial employment standards still apply where possible
- Minimum notice requirements may be enforceable
- Human rights protections continue during bankruptcy
- Collective agreement provisions may provide additional security
The Bay's Unique Situation
Hudson’s Bay, founded in 1670 and Canada’s oldest company, represents a significant moment in Canadian retail history. The company’s bankruptcy affects:
- 9,400 employees across Canada at time of filing
- Over 8,300 layoffs by June 2025
- Multiple generations of retail workers
- Significant impact on Canadian retail landscape
What This Means for Employees
- Large-scale layoffs may trigger additional government support
- Media attention may pressure for fair treatment
- Historical significance may influence political response
- Industry-wide implications for retail worker protections
Next Steps for Affected Employees
Immediate Actions
- Stay Informed: Monitor court proceedings and company announcements
- Protect Your Rights: File all necessary claims promptly
- Seek Support: Contact employment lawyers and government programs
- Plan Ahead: Begin job search and financial planning immediately
Long-Term Considerations
- Recovery through WEPP may take months
- Full severance recovery unlikely in liquidation
- Retraining opportunities may be available
- Employment references may be affected by bankruptcy
Contact an employment lawyer if:
- You believe you’re entitled to enhanced severance
- Your employment contract contains special provisions
- You have questions about your rights during bankruptcy
- You need help navigating the claims process
The Hudson’s Bay bankruptcy represents a challenging situation for thousands of employees. While traditional severance expectations may not be met, understanding your rights under WEPP and employment law can help you recover what you’re entitled to receive.
Don’t navigate this complex situation alone – professional guidance can make a significant difference in protecting your interests during this difficult transition.
Read more about layoffs at popular companies such as Stericycle, RBC, and Bell.
