Employment & Labour

Approval of Target Canada employee trust good news for workers

The approval of a $70-million employee trust for the benefit of Target Canada employees who will lose their jobs as a result of country-wide store closures is good news for workers, says Toronto employment lawyer Doug MacLeod.

After less than two years in Canada, the retailer announced plans to shutter its 133 stores across the country, dealing a huge blow to Target Canada’s 17,600 employees.

The company has obtained an initial order from the Ontario Superior Court of Justice for creditor protection under the Companies' Creditors Arrangement Act (CCAA), says a news release.

The order “authorizes Target Canada to begin a court-supervised wind-down of its Canadian businesses. It also provides for a broad stay of proceedings against Target Canada and authorizes Target Corporation to provide a debtor-in-possession credit facility of US$175 million to finance Target Canada's operations during the CCAA proceedings,” says the release.

The $70-million employee trust is meant to “help ensure fair treatment of Target Canada's 17,600 employees during the wind-down,” the release continues.

In an earlier announcement, Target Canada said the trust would provide Canadian employees with a “minimum of 16 weeks of compensation, including wages and benefits coverage for employees who are not required for the full wind-down period.”

MacLeod, principal at MacLeod Law Firm, says "employees normally stand in line with other unsecured creditors under the CCAA, but this $70-million employee trust appears to put the employees ahead of other unsecured creditors, which is obviously a good thing for employees."

Instead of receiving as little as no termination pay, it appears that employees will receive at least 16 weeks termination pay as a result of today's court order, he says.

Under provincial legislation, MacLeod says the company is not obligated to set up an employee trust – only to give the workers appropriate notice of termination.

Provisions in the Employment Standards Act’s Regulation 288/01 provide that notice of at least 16 weeks must be given if the number of workers being terminated is 500 or more, meaning Target Canada is meeting its minimum requirement, adds MacLeod.

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