In the last few weeks, employees — both current and former — of troubled retailer Sears Canada Inc. have had plenty to worry about after the company announced plans to restructure and then asked for relief from fulfilling its retiree benefits obligations and making special payments to its pension plan as it cut off severance payments to laid-off workers.
The company will be in court this week to request a suspension of certain payments following reports of shortfalls in its defined benefit and supplemental pension plans, as well as its life insurance and medical and dental benefits for retirees.
Read: Continued DB special payments would imperil Sears operations, CFO warns
When a company files for protection under the Companies’ Creditors Arrangement Act, secured creditors get priority over non-secured ones like employees receiving severance payments, according to Lior Samfiru, a partner at employment law firm Samfiru Tumarkin LLP.
And with Sears under creditor protection, employees don’t have much legal clout to recover their losses, he says. “It would be completely illegal in the normal circumstances. There’d be easy legal recourse. . . . [But with CCAA protection], they can essentially do things they would otherwise not be allowed to do with impunity.”
Read: Sears Canada seeking to suspend special payments as pension found to be 81% funded
Sears isn’t the first company to make pension and benefit changes during a restructuring case. Other companies, including Stelco Inc., Cliffs National Resources Inc. and Nortel Networks Corp., have faced similar challenges in recent years.
So in light of the impact of restructuring proceedings on employees, is it time for the government to enact legislative changes that better protect workers or would or would forcing onerous requirements on employers simply cause other problems? Have your say in this week’s online poll.
Last week’s poll looked at how more employers are allowing employees to dress casually on a regular basis and asked whether that trend is appropriate.
A significant percentage (42.5 per cent) of respondents said it’s time to acknowledge that employees can dress casually any day of the week when their work allows it. But 18.5 per cent of respondents disagreed and said companies have already eased their dress codes enough over the years and it’s important to maintain a level of professionalism. The rest (39 per cent) said adopting a casual dress code policy depends on the workplace and the employee’s role.
