On Friday, I was mindlessly meandering the aisles of my local Superstore, foraging for food and filling time, when I chanced on a conversation at the pharmacy. A man was paying for a prescription.

“Just six dollars,” the woman behind the counter said cheerfully. “Gotta love health benefits.”

“Actually,” replied the man, “I’m losing mine.”

It turned out he is one of 2,900 Sears Canada workers at 59 Canadian stores, including three in Nova Scotia, who will lose their jobs — and much more — in the latest chapter in the retailer’s seemingly endless, downward-spiral into its current “restructuring plan under court protection from creditors.”

The man is 64; he’s worked for Sears for more than 30 years. And he isn’t just losing his job and the family medical and dental benefits that go with it. The company has announced it won’t even be providing a severance package to him or the others it will soon jettison, nor will it continue to pay those currently receiving promised monthly severance payments as a result of earlier layoffs. And on Thursday, the company will go to court to try to also suspend monthly payments it had been making to its under-funded defined benefit pension plan and stop providing health benefits for 6,000 retirees.

A mealy-mouthed corporate mouth puppet mumbled on about “cash constraints” and “challenges.”

“Making those payments,” the PR person said, “would put the interests of one group of unsecured creditors ahead of those of other creditors, including secured creditors who have priority over unsecured creditors.”

Translated into English, what he was saying is Canadian law allows companies to put the financial interests of loyal, longtime employees and retirees who helped to build the company — unsecured creditors in legalese — behind (so far behind their interests do not really exist) the corporate financial interests of landlords and bankers and others.

Consider one of those others: “vulture” hedge fund billionaire and Sears controlling shareholder Eddie Lampert. While there is no question the retail sector has fallen on hard times and that many other companies have failed to weather the storms brought on by changing demographics and the pressures of online retailing, veteran business reporter Alan Freeman notes that Lampert has not simply presided over the company’s “long sad decline” but that he has, in fact, goosed it along by stripping Sears of its most valuable assets while reaping huge profits. Writes Freeman:

“Miraculously, he has managed to line his pockets while thousands of employees have lost their jobs and are watching their retirement plans melt in the summer sun. In November of 2013, Sears Canada announced a $5-per-share special divided, a total of $509 million — half of which went to Lampert and his Sears Holding Corp. in the U.S. A year earlier, it had issued a similar dividend of $102 million.”

Sears employees and its retirees won’t be the only unsecured creditors left holding air while Lampert and others count their cash. As retail consultant Jim Danahy told the Financial Post: “The large and small companies who employ people to make the goods that are sold at [insolvent retailers like Sears] are [also] typically the victims in this situation.”

Noted Toronto employment lawyer Lior Samfiru who has negotiated severance packages for former Sears Canada employees: “Our bankruptcy laws are such that a company can do that. That is where the problem lies. We can talk about Sears Canada’s actions being unfair and inequitable, but it is certainly not illegal.”

Surely, it is time to change that, time for our parliamentarians to put the rights of workers like the man at the pharmacy counter ahead of — or at least on par with — the rights of bankers and vulture capitalists.


The Sears situation reminded me of just how little serious labour reporting there is in this country, especially here in Atlantic Canada.

Last week, the Supreme Court of Nova Scotia dismissed yet another application by Sobeys-owned Lawtons Drugs for a judicial review of a 2015 Nova Scotia Labour Board ruling that found the company had deliberately “adopted uncompromising positions with respect to the negotiation of wages, and holidays and other leaves, without reasonable justification.”

The board’s original ruling involved an application from the United Food and Commercial Workers Union Canada. In 2014, employees at Lawtons Scotia Square branch chose the union to represent them — the first Lawtons retail operation to be unionized — and the union had begun trying unsuccessfully to negotiate a first contract. After eight months of fruitless bargaining, the union asked the board to impose one.

It’s worth noting that the union’s application was not filed under a controversial first-contract law the Dexter NDP government passed — which Sobeys and other big employers had lobbied loudly against — but under a de-fanged version introduced by the business-friendly Stephen McNeil Liberals.

The labour board’s initial ruling determined that the company had engaged in unfair stalling tactics, even under the watered down law.

Sobeys went to court first to prevent the board from even publishing the full — and highly critical — reasons for its decision. Last year, the judge in that case turned the company down, citing what he called “the astonishing history” of the negotiations.

Undaunted, Sobeys then asked for a judicial review, arguing the board had erred when it claimed the company failed to provide information on wages. That’s what Nova Scotia’s Supreme Court dismissed last week, declaring there was “no evidence that Lawtons had been prevented from marshalling the evidence” it claimed supported its position.

I read the story about this latest turn in what has been described as “an important test case” last week on the subscription-based business publication AllNovaScotia.com, the only news outlet where I found it reported.

Wanting to determine if I’d missed it elsewhere, I did a Google News search on “Lawtons.” I discovered a U.S. news report that “the Seneca Nation of Indians has formally entered into an agreement with North Collins to provide fresh, clean drinking water for 37 families in the Hamlet of Lawtons.” But I could find no news reports from any Google-searched publication on the court’s decision in the Lawtons labour board case.

I tried again, searching on “Lawtons” and “contract” this time, and  found a number of stories about former NHL hockey player turned commentator Brian Lawton commenting on rumours of a contract deal for Edmonton Oiler Leon Driasaitl. But nothing on the story I was looking for.

I even did a search in Local Xpress. The only reference to Lawtons was in an obituary.

An important labour test case?

Stephen Kimber is an award-winning writer, editor, broadcaster, and educator. A journalist for more than 50 years whose work has appeared in most Canadian newspapers and magazines, he is the author of...

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  1. Checking the databases which anyone with a Halifax Public LIbraries’ card can access via their webpage, I found on Proquest a March 1, 2011 article from a publication called Strategy: “Lawtons puts its people first”. LOL. Evidently, Strategy is a serial on the subject of marketing.

    Expedia is another useful database to which HPL subscribes but it can only be accessed at Central Lbrary.

  2. I cannot understand why unions aren’t organizing in support of defined benefit pensions plans, and why their assets aren’t protected from employers and their creditors.
    And if you think your defined contribution plan will be all you need when you retire, see a financial adviser. Run, don’t walk.

    1. The pension plan assets are protected and cannot be used by an employer or creditors of the entity. The fiscal details re a pension plan appears on a balance sheet to enable investors to understand all the obligations of a business.
      An HRM employee receives CPP, OAS and a pension at age 65 and a long service award. The same employee with 35 years service who retires at 65 will have a higher net income than when working.
      A DC plan can be better than a DB plan because all the assets are under the ownership and control of the employee and can be passed to a spouse or estate, The DB plan is based on a surviving spouse receiving less money when a pensioner dies.
      Probably better to have a TFSA and ask the employer to increase wages by the same amount as would be paid into a pension plan.

  3. Shareholders of Sears are also out money.
    Public sector pension funds, including HRM Pension Plan, place significant amounts of money with hedge funds in expectation of double digit returns.

    1. Shareholders receive quarterly or annual audited statements and thus have a far greater opportunity to protect themselves and possibly recoup their investment by selling. Average folks employed by Sears – or most publicly-traded or family-owned companies – do not have access to this same information, at least not easily. At least shareholders have decision-making power. In order to sell as a going concern, or even to enter bankruptcy protection, a corporation will do everything possible to maintain the illusion of business as usual.

      A lifetime ago as a young woman, I bought IBM shares and received annual reports. They always included proxy voting cards along with strongly worded suggestions that shareholders vote against general meeting shareholder motions to curtail and/or circumscribe executive pay and against any other investor actions they characterized as militant and infringing. Dal Senate’s response to Divest Dal symbolizes the usual corporate/institutional reaction to shareholder action. If actual on-hand pension funds – leaving disastrous unfunded liabilities aside – are invested in speculative vehicles that go south, that is not something shareholders and employees have direct control over. Employees are pawns on the chessboard, most vulnerable with least influence. They should not pay the price of reckless or incompetent management … but that’s in a just and fair world where capitalist lobbying and influence have not held sway in life and law.

      1. What do you regard as ‘speculative vehicles’ ?
        Bonds are the majority of the assets in the Sears pension plan.
        Sears employees do not contribute to the Defined Benefit pension plan.

        Greater detail here pages 75 et seq : http://www.annualreports.com/HostedData/AnnualReports/PDF/TSX_SEARF_2016.pdf
        CPP and Canadian public sector pension plans are investing across the globe and have a penchant for buying foreign assets such as airports, ports,railways, and water and power utilities.

        1. Hedge funds that you cited, and securities linked with credit default swaps, though latter have become justifiably feared since 2008.

          For anyone interested, here’s a good explanation of hedge funds: http://www.investopedia.com/terms/h/hedgefund.asp

          and credit default swaps:

          Thank you for the link you’ve provided. I’ll read it.

          I’m no financial expert, and I don’t hate capitalism. I do despise the ruthless, wild-west exercise it’s become, and Sears is the current example. Executives at Sears knew they were in turbulent waters long before the current crisis. But the game, the chase beckoned with a siren call. No doubt financial advisors cautioned and warned, but ultimately, CEOs and Boards make operational decisions. (Think back to ENRON and Nortel.) How much do we think employee pensions or unfunded pension liabilities – even severance – figured in top-level Sears’ decisions? If they did, it was probably to observe that Sears was not contractually, legally, or punitively [while trying to suppress glee] required to cover them.

          1. HRM pension plan invests with hedge funds as do almost all public sector pension plans in Canada.
            Credit default swaps are normal investment vehicles for managers who understand them.
            I believe Sears management eventually realised that continuing as a business was not an option. I was in the two stores in May and they were dead zones and had been for some time.
            The management of the DB plan was very conservative, almost 60% of assets in fixed income.