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Pilot Training Bonds Require Express Authorization to be Enforceable

View PDF: 2018-01 (Jan 3-18)

In a recent federal labour arbitration, the Air Line Pilots Association brought a grievance on behalf of Jonathon Sipko against Air Georgian Limited for making unauthorised deductions from Sipko’s wages when he left Air Georgian’s employment less than one year after undergoing captain upgrade training.

Facts

Sipko, a pilot, began his employment with Air Georgian on October 13 2015 as a first officer on a Canadair Regional Jet aircraft. Pursuant to the collective agreement in place, Sipko executed a 12-month ‘training bond’ agreement (ie, an agreement between a pilot and an airline which provides that the airline will pay for the pilot’s training as long as he or she remains with the airline for a specified term).

On August 3 2016 Sipko commenced captain upgrade training. On August 8 2016 he was given a second 12-month training bond agreement for the upgrade training. His upgraded compensation took effect on August 28 2016.

After undergoing the upgrade training on August 8 2016, Sipko advised Air Georgian that he would not sign the upgrade training bond.

On February 10 2017 Sipko resigned from Air Georgian. His last day of employment was February 26 2017 (which would have been within the upgrade training bond period had it been signed). On February 28 2017 Air Georgian deducted a pro-rated amount for the upgrade training from Sipko’s final pay. Sipko filed a grievance.

The labour arbitration was heard before a sole arbitrator.

Relevant Framework

Under the Canada Labour Code, an employer can make deductions from wages as follows:

254.1(1) General rule

No employer shall make deductions from wages or other amounts due to an employee, except as permitted by or under this section.

254.1(2) Permitted deductions

The permitted deductions are

(a) those required by a federal or provincial Act or regulations made thereunder;

(b) those authorized by a court order or a collective agreement or other document signed by a trade union on behalf of the employee;

(c) amounts authorized in writing by the employee;

(d) overpayments of wages by the employer; and

(e) other amounts prescribed by regulation.”

The Collective Agreement in place between Air Georgian and the Air Line Pilots Association states that:

Company pilots who successfully bid for an upgrade (either in status from FO to Captain or between aircraft types) shall agree to enter into an upgrade bond. The upgrade bond will be effective for a twelve (12) month period, have an initial value of $6,000.00 and will be pro-rated. The upgrading employee shall agree to repay the pro-rated remaining amount of the upgrade bond should he/she resign from the Company before the end of the twelve (12) month agreement period or if he/she has his/her employment terminated for cause.

The upgrade training bond provided to Sipko (which remained unexecuted by Sipko) contained the following provisions:

  1. The Pilot agrees that any amounts owed to the Pilot by the Company upon Termination, including but not limited to salary or outstanding vacation pay entitlements, may be deducted from the amount calculated using the formula in section 5 above, and by executing this Agreement the Pilot expressly and irrevocably authorizes the Company to make such deduction from amounts owed to the Pilot upon Termination as provided in this Agreement…
  2. Once signed, this Agreement shall remain in force unless the parties expressly agree in writing to vary or terminate it, and its operation shall not be affected by the termination or variation of any applicable workplace agreement that applied at the time that this Agreement was entered into.

Arguments

The Air Line Pilots Association argued that sub-section 254.1 of the Canada Labour Code sets out the general rule for prohibition of deducting wages and the exceptions thereto. The association argued that none of the exceptions applied. Specifically:

Sub-section 254.1(2)(b) did not apply, as the collective agreement did not authorise the deduction; and

Sub-section 254.1(2)(c) did not apply, as Sipko had not signed the upgrade training bond.

The union relied on the language of the collective agreement, which states that pilots and Air Georgian “shall agree to enter into an upgrade bond”. It further argued that this had required Sipko to agree to sign an upgrade training bond.

Air Georgian argued that, read together, the collective agreement and the upgrade training bond had permitted it to rely on the exception in Sub-section 254.1(2)(b). Air Georgian asserted that the signature is only a formality and that it had held up its end of the deal.

Decision

The arbitrator held that express authorisation had been required and that as there was none, Air Georgian could not rely on the exception:

“However, express authorization was required for the deduction to be made from wages and, in my view, there was no such authorization in this case. The collective agreement does not provide for it, the bond does, and the bond requires employer and employee signatures. The latter was missing. Mr. Sipko did not sign the bond, to the knowledge of the Company, yet the Company provided the training anyway.”

The fact that Air Georgian had upheld its end of the deal was irrelevant:

The perhaps unfortunate bottom line is that the Company did not avail itself of its clear collective agreement right to require Mr. Sipko to enter into the bond as a condition of receiving the training. It trained him notwithstanding. That being the case, the Company was not authorized to make the impugned deduction from Mr. Sipko’s wages. The “general rule” set out in section 254.1(1) of the Code applied. There was no exception.

Comment

This case serves as a caution for airlines to ensure that they have express authorizations with employees (commonly in the form of written and signed agreements).

Air Georgian Limited v Air Line Pilots
Association
, 2017 CanLII 57383 (CA LA)