HBC fires employees just one day after pay cut in bid to save on severance

HBC takes advantage of employees in mass layoff to reduce severance obligations

Hudson’s Bay Company has fired 94 employees just one day after imposing a 25% “temporary” salary reduction in an apparent attempt to avoid legal severance pay obligations, employment law firm Samfiru Tumarkin LLP has learned after consultations with multiple former staff.

“HBC is seeking to avoid paying fair severance packages that are legally owed to these individuals during these difficult times,” said employment lawyer Lior Samfiru, partner at Samfiru Tumarkin LLP. “Employees accepted the reduced salary to help the company weather the coronavirus crisis and in effort to remain employed. Given the timing, HBC must have known that it will terminate employees, so for it to now try to base severance on the reduced salaries is unconscionable.”

In a letter issued to the affected employees in March, HBC stated that due to the global COVID-19 pandemic, “base salary will be reduced by 25%” in “an effort to keep [HBC’s] employees actively employed while also maintaining the viability of our business.”

The temporary pay cut came into effect on April 16, with the surprise terminations occurring the following day on April 17. HBC then sought to base the severance packages provided its employees on the reduced salaries, rather than their pre-reduction earnings.

Under common law in Canada, employers are required to provide full severance packages to employees. Severance pay is based on a number of factors, including age, length of service, position and salary, and can amount to as much as 24 months’ pay.

“The difference between what these employees are owed and what HBC is now offering likely adds up to months of pay,” confirmed Samfiru, who represented numerous Future Shop employees during the chain’s 2015 closure who were wrongfully dismissed and offered inappropriate severance packages.

“During a time when everybody is encouraged to work together to get through the COVID-19 pandemic and crisis, HBC has chosen the opposite path by showing little empathy or good will towards its employees.”

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