Some people will no doubt get some bargains as Sears gets rid of its stock and cleans out its stores.
But head office staff of Sears Canada will get a real bargain. In fact, in total, Sears will end up paying up to $6.5 million in bonus payments, including retention bonuses, to head bosses from the time Sears filed for insolvency in June until it closes for good.
To add insult to injury, the employees who helped build the company, and who contributed to their company pension plan in the hope of having a modest retirement fund, have discovered that their nest egg is rotten.
One Sears Canada employee was shocked when she found out she would only initially receive 81 per cent of the value of her pension as part of the company’s insolvency process.
How can a company do this? The problem is that the law allows it to do it.
When a company files for court protection from creditors, employees are at risk. If they have an “undefined pension plan” that plan’s funds can be used, at least in part, to pay off creditors.
This is not news to labour unions in Canada.
They have been fighting for years to get employee pension funds of any kind completely protected in a bankruptcy filing. They have also been fighting to ensure that employees are always at the top of every creditor’s list for every item when companies go bankrupt.
In 2009, the NDP proposed the so-called Nortel Act (based on a Milton, Ont. company going bankrupt) to have workers seeking to claim the unfunded portion of their pensions considered as preferred creditors in bankruptcy proceedings.
But that never passed, and Nortel retirees lost a percentage of their pension benefits as the former tech company dissolved.
Now the same thing is happening to Sears employees.
This past week, several MPs said they were going to present private members’ bills, which would change the law and protect future workers.
One such bill by MP Marilène Gill would amend the law and would “correct the injustice faced by retired workers whose pension plans and group insurance plans are not protected when their company goes bankrupt or undergoes restructuring.”
This is long overdue and, we hope, a no-brainer for our political leaders.
