Pier 1 Imports Closure and Severance Pay

Home decor company Pier 1 Imports Inc. is filling for Chapter 11 bankruptcy protection in the United States. This news comes shortly after the company’s announcement that it was closing all stores in Canada.

Of Pier 1 Imports’ hundreds of stores in North America, around 50 can be found in Canada, where the company is currently pursuing creditor protection.

The home goods retailer has been finding it extremely difficult to remain profitable in recent years. The company has seen increased competition from online retailers, and has been unable to bring in younger customers.

Pier 1 Imports: Severance for employees

When a company decides to close down its operations in Canada without seeking creditor protection or bankruptcy, they must provide employees with notice of termination. Notice can be provided in the form of working notice, pay in lieu of working notice (severance pay), or a combination of both full.

Severance pay is calculated by examining an employee’s age, length of employment, position and ability to find a new job.

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• Severance Pay Calculator
• Severance Pay in Ontario

However, when a company pursues creditor protection, employees are moved to the back of the line when it comes to financial compensation. Severance packages are usually not forthcoming, as the company’s liquidated assets are used to pay off front-of-the-line creditors, including financial institutions.

Canadian employees of Pier 1 Imports cannot seek a fair severance package under common law from their employer.

The Sears Act

As the Canadian retail landscape continues to stumble amidst the rise of online shopping, employment lawyer Lior Samfiru persists in bringing awareness to the plight of tens of thousands of employees who are ignored and discarded by the bankruptcy process.

Since the day Sears Canada sought creditor protection before closing its doors in early 2018, Samfiru has been urging the federal government to make changes to the country’s bankruptcy laws. Samfiru’s Sears Act would update bankruptcy laws in Canada, in favour of employees.

Samfiru believes that either employees should be made secured creditors with respect to severance and pension entitlements, or officers and directors of a company be held personally liable for employees’ severance entitlements.