MEC will lay off 15 percent of its workforce and close 1 store

In anticipation of a pending sale, the retailer sent layoff notices to dozens of employees last week.
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MEC Ottawa store

The sale of MEC to an American investment firm can proceed as planned, a judge in British Columbia ruled.

Despite a large grassroots effort organized in recent weeks to save the struggling Canadian co-op MEC from being sold to an American investment firm, it appears the acquisition will proceed. This month, British Columbia supreme court justice Shelley Fitzpatrick green-lighted the sale, dismissing a request by members of the opposition group Save MEC to delay it.

In anticipation of the ownership change, MEC leadership sent layoff notices to dozens of employees late last week, informing them of immediate termination without severance pay. It's unclear exactly how many employees were laid off, but according to MEC's board of directors, 15 percent of current active staff members will lose their jobs as a result of the sale. One store out of the company's 22 will also shut down.

NEWS 1130 in Vancouver reported that the number of layoffs might be artificially deflated, however, as it's unclear how many of the company's 1,300 furloughed staff members—most of them temporarily laid off in March and April—won't return to work. 

Under British Columbia's Employment Standards Act, employees temporarily laid off after June 1 due to the coronavirus pandemic are entitled to severance pay, provided they weren't hired back to their positions before August 30. Greg Crosby, a MEC employee for nearly 12 years, has accused MEC of avoiding its duty to pay him severance. 

What will become of Save MEC?

One question that remains is how the protest group Save MEC, which raised over $100,000 to fight the sale, will proceed from here. Elliot Hegel, one of the group's organizers, said the community of more than 150,000 petition signatories has three basic options: restructuring the cooperative that underlies MEC as a business (which still technically exists and belongs to the group's 5.7 million members, independent of the company's sale), forming a new co-op from the ground up, or refocusing attention on co-op advocacy more broadly in Canada.

"We're still waiting for Justice Fitzpatrick's written reasoning behind the judgment. That will proceed how we move forward," Hegel told SNEWS. 

He noted that, even though MEC was founded under the Cooperative Association Act of British Columbia, it filed for creditor protection under federal legislation, through the Companies' Creditors Arrangement Act. It was this latter piece of legislation that allowed the sale to proceed without the direct consent of MEC's member-owners.

"The federal law that allowed this to happen doesn't address the differences between a co-op and a regular corporation," Hegel said. "It exposed a major gap in legislation. Co-ops need special consideration and special protection. That's one of the things we're interested in seeing when Justice Fitzpatrick releases the written reasoning behind her ruling. We want to see how she balanced the provincial legislation with the federal legislation. It was only because of the federal law that the board of MEC was able to shut out its member-owners."

Bruno Roelants, director-general of the International Co-operative Alliance, expressed his support in a letter addressed to all MEC members.

"The 5 million members and owners of MEC need to exercise their democratic voice to shape the future of their cooperative. Any decision regarding the sale and termination of the cooperative cannot be taken without the approval of the members’ assembly," Roelants wrote.

The letter did not, however, address the "gap in legislation" that eventually delivered a defeat to Save MEC. That legal gray area, Hegel said, will continue to affect the fate of cooperatives in Canada for many years to come, especially given the precedent established by the sale of MEC.

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