Sears Canada Layoffs: Thousands Left Without Severance or Pension

They showed up for work. But instead of job security, they faced bankruptcy headlines and shuttered stores.

When Sears Canada collapsed in 2017, nearly 3,000 employees were terminated immediately, and another 12,000 jobs vanished as stores across the country closed.

Employees weren’t just losing paycheques. Many were also told their severance pay was gone — and their pensions were underfunded, leaving longtime workers with devastating financial losses.

For some, the news meant decades of loyalty ended with nothing more than a locked door.

At Samfiru Tumarkin LLP, Canada’s leading employment law firm for non-unionized employees, we stepped in to uncover the truth about what workers were really owed — and why so many were left behind.

What Happened?

Sears Canada had been struggling for years as retail giants like Walmart, Amazon, and Costco reshaped shopping habits.

In June 2017, the company filed for creditor protection. At first, executives claimed stores would remain open. But by the fall, it was clear: Sears Canada was finished.

• 2,900 employees were immediately terminated without severance (wrongful dismissals)
• 12,000 more workers were eventually let go as stores closed nationwide.
• Pensions were underfunded by hundreds of millions of dollars.
• Meanwhile, executives received retention bonuses to “oversee” the wind-down.

The contrast was glaring — loyal frontline workers left with nothing, while managers and executives received payouts.

The Legal Concerns

Our lawyers immediately raised alarms about how employees were being treated during the collapse.

Lior Samfiru, co-founding partner of Samfiru Tumarkin LLP, explained:

“Employees who had worked 20, 30, even 40 years were suddenly told they would not receive severance. These individuals had dedicated their lives to Sears. To leave them with nothing, while executives got bonuses, was incredibly unfair.”

Key concerns included:

• Severance ignored completely due to bankruptcy law loopholes.
• Employees treated as “unsecured creditors”, leaving them last in line for any payouts.
• Bonuses for executives approved in court while frontline staff went unpaid.
• Pension losses that cut retirement savings by as much as 20–30%.

The collapse exposed how vulnerable Canadian employees are when their employer files for bankruptcy.

What Severance Should Have Looked Like

Under Canadian common law, employees are entitled to up to 24 months of severance pay, depending on factors like:

• Age
• Length of service
• Position and responsibilities

For long-serving Sears workers — some with decades of service — severance could have amounted to hundreds of thousands of dollars.

Instead, because of outdated bankruptcy laws, many received nothing at all.

The Sears Act Proposal

The crisis sparked national debate about reforming bankruptcy laws. Our firm pushed for changes to ensure employees aren’t left empty-handed again.

Liorr Samfiru advocated for what became known as the “Sears Act” — proposed legislation to give employees priority in bankruptcies:

• Classifying employees as secured creditors (like banks)
• Guaranteeing at least partial severance and pension protection
• Preventing executives from collecting bonuses while workers go unpaid

While the law hasn’t yet changed, the Sears case remains a turning point in how Canadians understand employee rights during corporate bankruptcies.

The law firm was featured in additional reporting:

• 🎙️ Newstalk 580 CFRA (Ottawa) – June 22, 2017
• 🎙️ 640 Toronto – June 22, 2017
• 🎙️ 570 News (Kitchener) – June 23, 2017
• 🖥️ Global News – June 23, 2017
• 🎙️ Newstalk 580 CFRA (Ottawa) – June 26, 2017
• 📰 Huffington Post – June 27, 2017
• 🎙️ 640 Toronto – June 29, 2017
• 🎙️ 640 Toronto – July 7, 2017
• 🎙️ Newstalk 580 CFRA (Ottawa) – July 14, 2017
• 🎙️ 770 CHQR (Calgary) – July 25, 2017
• 🎙️ 640 Toronto – July 27, 2017
• 🎙️ 980 CFPL (London) – October 31, 2017
• 🎙️ 640 Toronto – October 20, 2017

What This Means for Canadian Employees

The Sears Canada layoffs revealed a hard truth: if your employer files for bankruptcy, you may not automatically receive the severance you’re owed.

But in many other termination situations — restructuring, downsizing, or business closure without bankruptcy — full severance must still be paid. Employers often offer far less than the law requires, counting on employees not to question it.

That’s where we step in.

Protecting Your Rights

If you lost your job in Ontario, Alberta, or BC, don’t assume the package you were offered is fair. You are likely owed significantly more severance pay than your employer is letting on.

At Samfiru Tumarkin LLP, we’ve helped thousands of Canadians secure the full compensation they deserve. Before you sign anything, get advice from the team that’s changed the landscape of Canadian employment law.

• 👥 Over 50,000 clients helped nationwide
• 💰 Millions recovered in compensation
• 📱 Free Termination Consultations — in most, but not all, cases
• ⚖️ No win, no fee — you don’t pay unless we succeed
• ⭐ 3,063 5-star Google reviews across all offices (4.7 average)
• 🏆 Named one of Canada’s Best Law Firms by The Globe and Mail