TORONTO — Among the Canadians that lose their jobs every year are many that face a twist: it isn't just their employment vanishing but also the company they work for.
Whether the wind down is because the owners are simply giving up the business or like 355-year-old department store chain Hudson's Bay, has not been able to handle its debt, the disappearance of an employer brings extra difficulties to the unemployment process.
"It's absolutely a bit more complex," said Sunira Chaudhri, founding lawyer at Workly Law in Toronto.
Workers might have to wade through bankruptcy or creditor protection court processes to get paid outstanding earnings or may later find they have no point person to help locate paperwork they'll need during tax season or when applying for government assistance.
The extra layer of complexity makes it even more important for workers to plan ahead so they can recover from the job loss, say Chaudhri and other labour experts.
As soon as it becomes clear the company you work for is winding down and taking your job with it, it’s time to start collecting documentation, like records of employment, T4s and contracts or letters describing your pay, commission and vacation, said Neena Gupta, a Waterloo, Ont.-based partner at Gowling WLG.
“One of the shocking things that happens is sometimes the systems you rely upon to retrieve your paycheque, find out how much vacation pay you have, determine whether you have a bonus coming to you, calculating your commission — you stop having access to those systems,” she said.
If you have documents detailing what you’re entitled to, Gupta said, “you can establish with some confidence what your employer owes you.”
If there is a gap between what you're owed and what you're offered in severance or an exit package, a lawyer, your union or if your company filed for creditor protection or bankruptcy, the court-appointed trustee or monitor, can offer paths forward.
Unravelling what is possible in your situation often starts by looking closely at termination letters or severance packages you're presented with.
Chaudhri encourages people not to sign any paperwork accepting these payments until they've reviewed how their offer compares to their employer's obligations outlined in provincial employer legislation, collective agreements and contracts workers sign.
Often there is "more money that can be on the table," Chaudhri said.
"Usually, the first offer is one that can be improved upon," she said. "They're hoping you take that deal and that's why it's important to do your due diligence."
A lawyer can walk you through whether any fight you want to wage for a better package has merit and if you provide documentation like records of employment, it will speed up the process.
But Chaudhri warns that just because your case has merit, doesn't mean you're in for a cheque.
While there can be ways to hold directors accountable later, a company that has been granted creditor protection — a court process preventing people from suing an indebted business for amounts owed — can't face immediate legal action. This is currently the case for the Bay, which employed 9,364 people before it began liquidating all of its stores.
Sometimes business will run out of money while court proceedings unfold.
That's part of why many labour experts suggest workers also explore unemployment support programs.
Gupta said the main program in Canada is employment insurance, which provides money to some who have gone without work and pay for at least seven consecutive days in the last 52 weeks. To be eligible, workers must meet a range of criteria including a minimum number of hours worked in the lead up to the end of their job. While they collect EI, they must show they are job hunting.
For workers owed wages, vacation, termination or severance pay by employers that filed for bankruptcy or made certain proposals under the Companies' Creditors Arrangement Act, the federal government runs the Wage Earner Protection Program. People who qualify under the program can earn up to $8,844.22 this year, Gupta said.
Most of these programs require people to apply once they've had their last day of work.
By that date, Gupta says workers should also have sought contact information for supervisors or colleagues who can vouch for them when they're on the cusp of their next job — advice Gupta recently heard from an acquaintance whose employer went bankrupt.
“Even if she couldn't get an official reference from HR she could at least say, 'Well, my supervisor was so and so, she’s also laid off, but you can talk to her,'” Gupta recalled.
“She had all of that information, which helped her find her next job.”
This report by The Canadian Press was first published May 22, 2025.
Tara Deschamps, The Canadian Press
