The recent bad news at Hudson’s Bay has again caused a review of the rights, or lack of them, of employees who have been terminated due to the insolvency.

In Ontario, directors remain personally responsible for unpaid salary up to a cap of six months’ salary. They are also responsible for unpaid statutory vacation pay for 12 months. Both these obligations apply only to the time period within which the person was a director.

Also, in bankruptcy, there is a modest preferred claim for unpaid wages up to $2,000.

The Federal Government’s relatively new Wage Earner Protection Act allows for recovery of sums due for unpaid wages, vacation pay, termination and severance pay up to a cap $8,844. Employment Insurance benefits will be available in the normal course.

All other claims will be seen as those of a general creditor and placed well at the back of the bus.

Registered pension plan benefits will be protected. Supplemental pension benefits which are not funded by a trustee will be seen as a claims of a general trade creditor.

Most disability plans will likely contain a term which ends the policy on insolvency. There may be a window if the premiums have been paid to cover a period which extends beyond the date of the demise of the employer.

If so, or if the medical disability commenced prior to the date of the insolvency, and the medical evidence is timely, there may well be a claim for lost disability benefits until age 65, where the disability is uninterrupted. One recent human rights case has considered the possibility of benefits going beyond age 65, despite the policy wording. Such claims may well be viewed skeptically and medical evidence will be critical.

Actively existing claims will be continued, subject to the usual obligations. Claims which transition from own occupation to any occupation, usually at the two year mark, may well be viewed more harshly in this context.

Disability benefits provided by means of Administrative Services Only plan will be unsecured general creditor claims. Why such a process is allowed is bizarre, given the mandate of solvency required by the Insurance Act for any insurer doing business in each jurisdiction. The Federal Government is the only legislator to ban such policies. The 2009 bankruptcy of Nortel led to such a circumstance, which should not be repeated.

All of the above presumes that there are no possible claims against individuals in control of the business for human rights violations or other seriously actionable transgressions prior to the insolvency.

Given the present economic uncertainty created by the unnecessary tariff war, these issues will require close attention.