The Body Shop Canada: Bankruptcy and Severance Pay

The Body Shop Canada plans to restructure itself under the Bankruptcy and Insolvency Act (BIA).

What’s happening at The Body Shop Canada?

In a news release on March 1, the cosmetics retailer said it will immediately begin liquidation sales at 33 of its 105 stores and halt its e-commerce operations.

“Following the commencement of administration proceedings in the United Kingdom by [our] parent company, The Body Shop Canada is commencing this [process] to obtain a stay of proceedings to provide additional breathing room while [we evaluate our] strategic alternatives and [implement] certain restructuring initiatives,” the release reads.

According to The Globe and Mail, more than 200 workers will be affected by the restructuring.

The Body Shop U.S. has also ceased operations.

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Where are the store closure sales taking place?

The Body Shop Canada said the following 33 stores will immediately commence liquidation sales:

How did The Body Shop Canada get here?

Since 1980, The Body Shop Canada has maintained a steady presence across the country — predominantly in malls.

However, the dawn of e-commerce and strong competition from various beauty brands, including Bath & Body Works, Sephora, and Lush, has been challenging for the company.

Severance pay for employees at The Body Shop Canada

When a company restructures or declares bankruptcy, it’s still responsible for providing workers with unpaid wages and severance packages.

Therefore, The Body Shop Canada owes full severance pay to non-unionized employees who lose their jobs. This includes individuals working full-time, part-time, or hourly in Ontario, Alberta, and B.C.

However, because employees are classified as “unsecured creditors” during a restructuring or bankruptcy in Canada, the reality is that staff at the cosmetics retailer will likely receive little to no severance.

Why: Unsecured creditors are lower in priority for repayment — behind secured creditors like banks and government tax claims. In many cases, there’s usually not enough money to fully compensate staff after secured creditors are paid.

The difference between what The Body Shop Canada employees are owed, and what little they might receive, could be tens of thousands of dollars.

ADDITIONAL RESOURCES
• Wrongful dismissal in Ontario: Employee rights
• What to know about wrongful dismissals in Alberta
• Wrongful dismissal in B.C.: What employees need to know

The Sears Act

Championed by Samfiru Tumarkin LLP, the Sears Act focuses on better protecting employees during a company’s bankruptcy.

It aims to make sure employees get treated as secured creditors, so they can be paid their severance and unpaid wages first — ahead of unsecured creditors.

When should I contact an employment lawyer?

You should contact the experienced employment law team at Samfiru Tumarkin LLP immediately — but ONLY when you lose your job, your employer permanently closes the company, and one of the following happens:

• Your employer doesn’t file for restructuring or bankruptcy
• Your employer claims they will file for bankruptcy through the BIA or the Companies’ Creditors Arrangement Act (CCAA), but doesn’t follow through

In these scenarios, non-unionized employees are still legally entitled to a full severance package, which can be as much as 24 months’ pay.

This is where Samfiru Tumarkin LLP can be invaluable. Our employment lawyers in Ontario, Alberta, and B.C. have helped tens of thousands of individuals enforce their rights.

If you are a non-unionized worker who needs help with an employment issue, contact us or call 1-855-821-5900 to get the advice you need, and the compensation you deserve.