Former staff push for hardship support, LTD settlements, access to federal program
Lawyers for former Hudson’s Bay Company (HBC) employees are asking an Ontario court to sign off on a multimillion‑dollar hardship fund and a lump‑sum payout for workers whose long-term disability (LTD) benefits were disrupted in the retailer’s insolvency, according to the Canadian Press.
A motion filed by Ursel Phillips Fellows Hopkinson LLP (UPFH) seeks approval from the Ontario Superior Court for a hardship fund aimed at ex‑employees and retirees who have struggled to cover basic living costs since HBC’s collapse last year, as well as a termination package for those whose LTD benefits were suspended in June 2025.
According to court materials, the proposed fund would be financed from three main sources: approximately $9.9 million from a Zellers health and welfare trust, about $1.6 million from an HBC reserve fund, and $250,000 in cash currently held by the company. The fund would offer means‑tested one‑time payments of up to $9,600, with the possibility of an additional $2,500 for medical or other emergencies, for former workers and retirees who can demonstrate financial hardship after the company’s shutdown.
Lump-sum termination payment for interrupted LTD benefits
At the same time, UPFH is asking the court to approve a lump‑sum termination payment for the remaining group of LTD recipients whose benefits were interrupted during the insolvency process. When HBC filed for creditor protection, 188 people were receiving LTD benefits and many have since turned 65 and aged out of eligibility, leaving about 158 claimants still covered by the proposed settlement, the Canadian Press reported. The law firm argues that the lump‑sum approach is designed to give disabled former employees enough income security to bridge them to age 65 and provide time to reorganize their finances.
“This agreement will provide significant assistance for some of the most vulnerable employees affected by this insolvency, who are unable to find alternative work because of their disability and who were otherwise facing the immediate loss of their primary source of income,” UPFH partner Susan Ursel said in a statement.
Beyond the proposed mechanisms, the motion underscores the broader scale of the fallout. When HBC sought creditor protection and ultimately shuttered its stores, it employed more than 9,300 people across Hudson’s Bay and Saks locations, distribution centres, and head office operations, leaving a complex trail of unpaid or disputed employment‑related entitlements, including termination pay, severance, wage top‑ups, and benefits, reported the Canadian Press.
Seeking access to Wage Earner Protection Program
For non‑unionized HBC staff, retirees, and former employees with continuing entitlements, UPFH was appointed representative counsel in May 2025, shortly after the company obtained protection under the Companies’ Creditors Arrangement Act (CCAA) in March 2025. On its dedicated information page for affected workers, the law firm explains that a court‑appointed monitor, Alvarez & Marsal Canada Inc., is overseeing the restructuring proceedings and communications.
UPFH states on its page that a key part of the strategy has been to trigger access to the federal Wage Earner Protection Program (WEPP), which compensates eligible workers when an employer in insolvency owes wages, termination pay, or severance. The firm notes that the company brought a motion in mid‑2025 to obtain a court order that would establish a WEPP entitlement date in June 2025 for HBC employees, opening the door to claims of up to $8,844.22 per person under the 2025 WEPP maximum.
In its guidance to affected staff, the firm has repeatedly warned that because HBC carries significant secured debt, it is unclear whether employees will recover any meaningful amounts directly from the company’s remaining assets. Instead, the legal team has positioned WEPP and targeted hardship or LTD arrangements as the primary vehicles to mitigate losses.
Union pressing HBC to honour collective agreement provisions
While UPFH has been advancing claims for non‑unionized and retired workers, Unifor has publicly pressed HBC over its obligations to unionized staff. The union, which represents roughly 600 HBC employees at stores in Windsor, Kitchener, Toronto’s Sherway Gardens, and an e‑commerce warehouse, has issued a series of statements calling on the company to honour collective agreement provisions on wages, severance and benefits and to provide clear communication about closures and layoffs.
In a March 2025 decision, a judge rejected an HBC proposal related to creditor protection, reflecting ongoing tension between lenders, the company and other stakeholders over how remaining value should be allocated, according to the Canadian Press.
