Some Hudson's Bay workers could lose disability benefits. An Ontario bill may have protected them

Globe and Mail

22-05-2025

Uncertainty around the future of long-term disability benefits for Hudson's Bay Co. employees highlights inaction by the Ontario government, which did not follow through on a 2014 piece of legislation designed to protect vulnerable workers.
Hudson's Bay filed for protection from its creditors under the Companies' Creditors Arrangement Act (CCAA) in March. As Canada's oldest retailer continues the process of closing down its operations, more than 9,000 employees have been affected by the shutdown, and some fear their long-term disability payments could soon disappear.
Last month, The Globe and Mail reported that Hudson's Bay's benefits plan provided long-term disability payments through an 'administrative services only' (ASO) arrangement, which meant the company used its own cash to make those payments.
Yet a crucial piece of legislation – known as Ontario Bill 14 – that received royal assent on July 24, 2014, would have addressed the very predicament those HBC employees now face had the Ontario government taken the final step to make it law.
Instead, for reasons never publicly disclosed, the legislation died without ever coming into force.
'The gravity of that ball dropping is huge,' said Aman Chaggar, a disability and employment lawyer at Whitten and Lublin in Toronto, who is not representing HBC employees.
To protect vulnerable people, there should be some checks and balances in place to ensure that 'appropriate legislation is somehow being regulated and enacted,' Mr. Chaggar said.
As of 2022, about 970,000 people across Canada receive disability income protection through uninsured plans, according to the Canadian Life and Health Insurance Association. Currently, such plans provide wage replacement benefits to approximately 25,000 people with disabilities.
Hudson's Bay's ASO arrangement applies to roughly 190 current and former staffers, a lawyer for the employees confirmed. As the company winds down operations, those benefits are at risk. Another 100 to 200 employees receive benefits under an insured plan that is not affected by the CCAA filing.
Hudson's Bay Co. ULC has been incorporated in British Columbia since shortly after HBC went private in 2020. Its largest Canadian corporate office is in Toronto, and 41 of 96 stores in liquidation are in Ontario.
Advocates say that had such legislation been brought into force in Ontario, it would have given a push to other jurisdictions across the country to enforce similar protections for long-term disability benefits.
The 2014 bill was passed under Ontario's then-Liberal government and would have required all businesses in the province to legally insure their long-term disability benefits. That would have guaranteed that disability payments would continue to be paid out to employees even if an employer goes out of business.
However, the Ontario government didn't put the bill 'into force' – a necessary step to make it legally binding. Instead, Bill 14 sat untouched until it expired on Dec. 31, 2024, for not being enacted within a 10-year time limit – just four months before the collapse of HBC.
There is no clear answer as to what happened next with Bill 14. Insurance industry executives told The Globe they weren't told why the legislation died. Four years later, in 2018, it was handed over to the incoming Progressive Conservative government, which is still in power.
Colin Blachar, a spokesman for Finance Minister Peter Bethlenfalvy, did not provide an explanation about why the PC government never finalized Bill 14.
For the Hudson's Bay employees not covered by the insured plan, any continuing disability benefits after the company ceases to exist will now depend on agreement with the company's senior lenders.
In-depth: A look at the fall of Canada's oldest retailer
Those lenders are currently involved in discussions that could lead to 'significant' assistance for some of the 'most vulnerable' HBC employee and retiree groups, lawyer Susan Ursel told a hearing in Ontario Superior Court in Toronto on May 13. Ursel Phillips Fellows Hopkinson LLP was recently appointed by the court as representative counsel for the HBC employees.
'We are canvassing all available options to assist with the loss of these benefits,' Ms. Ursel wrote in an e-mail to The Globe.
As employee counsel, 'we share concerns that have been expressed by various parties from other CCAA matters in the past that long-term disability benefits should be insured for all workers to protect against these kinds of serious hardships,' Ms. Ursel wrote.
The uncertain fate of HBC workers is the exact scenario that Stephen Frank, president and chief executive officer of the CLHIA, was trying to prevent when he raised the alarm on uninsured plans in a magazine column he wrote in 2014.
Following the collapse of farm equipment manufacturer Massey Ferguson in 1988, the Eaton's retail chain in 1999 and Nortel Networks Corp. in 2009, Mr. Frank saw a pattern of iconic Canadian companies falling into financial crisis without insured long-term disability plans. It appeared to be a 'once-a-decade' scenario that he wanted to stop.
'Ensuring that Canadian employees covered by long-term disability plans continue to receive their benefits regardless of their employers' financial position is an important public policy issue,' he wrote.
Today, Mr. Frank says CHLIA's position on the matter remains the same: Long-term disability plans should be insured.
'We encourage the Ontario government to consider re-examining the implementation of this bill,' Mr. Frank said in an e-mail to The Globe.
Following the collapse of Nortel, the federal government passed legislation to require federally regulated private-sector employers to insure long-term disability plans. The legislation received royal assent on June 29, 2012, and came into force on July 1, 2014.
However, many Canadian companies are incorporated provincially – meaning provincial governments need to pass their own legislation.
Following years of advocacy work by the insurance industry, Mr. Frank applauded the Ontario government in his 2014 column for passing the legislation that would have required all Ontario corporations to insure their long-term disability benefits. And he called on other provincial governments to follow suit.
'Provincial uptake on this is critical as the bulk of Canada's corporations are incorporated provincially,' Mr. Frank wrote in 2014.
'Hopefully, with successful take-up across the country, we can break the 10-year cycle,' he added.