Aug 4

24 Months’ Notice and Lifelong Flight Privileges for Wrongfully Dismissed Air Canada Employee

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In the face of a pandemic decimating the airline industry, Air Canada made the decision to lay off and terminate a significant portion of its workforce. The Plaintiff in Ruel v Air Canada was one of those impacted by this decision. The Plaintiff commenced a wrongful dismissal suit seeking damages for the tangible and intangible elements of his compensation, including retiree travel benefits, which expert evidence valued at $1,800,000.00.

In its 2022 decision, the Court indicated that the Plaintiff’s age, tenure, and position justified a 24-month notice period, prior to even considering the impact of the pandemic. More notably, with respect to lost flight privileges, an entitlement the Plaintiff would have received with an additional 5.83 months of employment, the Court determined that the Plaintiff would be entitled to specific performance (rather than an award for damages). This allowed the Plaintiff to qualify for lifelong flight privileges.

The Decision

The 52-year-old Plaintiff, in this case, was employed by Air Canada for nearly 25 years. As a Director for Customer Experience at Pearson International Airport, his compensation included a variety of benefits, including bonus compensation and, notably, unlimited business class travelling passes through Air Canada for the rest of his and his wife’s life. 

In June of 2020, because of the pandemic, Air Canada laid off and dismissed a significant amount of its workforce, including the Plaintiff. In response, the Plaintiff commenced an action for wrongful dismissal. 

In reviewing the typical Bardal factors, the Judge acknowledged that downturns in the economy, such as those caused by the pandemic, can indeed be considered when determining the reasonable notice owed to an employee. Due to the decimation of the airline industry, the Judge acknowledged that the pandemic significantly limited the prospects of reemployment in the industry the Plaintiff had worked in nearly his whole life. Taking all factors into consideration, the Judge awarded 24 months’ notice and 10% of the Plaintiff’s salary in lieu of benefits over the notice period.

In addition to determining notice, the court had to determine whether the Plaintiff would also be entitled to the loss of various benefits, stocks, pension accrual, and other employment privileges during the notice period. The Judge reiterated the frequently cited principle that the purpose is to place an employee in the same financial position they would have been had the notice not been given, which includes all losses and benefits. As a result, the Judge awarded the Plaintiff the loss of his group health benefits, lifetime retiree benefits, LTIP benefits, and accrued pension benefits. 

With respect to Air Canada’s “Annual Incentive Plan” (AIP), the Judge found that the plan’s language, while ambiguous, did not unambiguously take away the Plaintiff’s common law entitlements to these benefits during the notice period. The Judge reiterated the Supreme Court decision of Matthews that “the employment contract is not treated as ‘terminated’ until after the reasonable notice period expires”.

Lastly, the Plaintiff sought damages for the loss of his retiree travel privileges, which included lifetime business class Air Canada passes for him and his wife. Through the use of expert evidence, the Plaintiff valued this benefit at $1,800,000.00. Given the fact that travel privileges could be subject to modification, amendment and termination, the Judge found that it was more appropriate to implement specific performance of those privileges, rather than a blanket payout.  

Going Forward: Key Takeaways to Consider

Oftentimes, many companies take the position that if they terminate an individual prior to the standard payment timeline for bonuses, stock options, LTIPs or other entitlements, then the terminated employee is not entitled to them; simply by virtue of not being ‘actively employment’. In this case, following the Supreme Court decision of Matthews, that logic has once again proven to be false. 

Moreover, in circumstances where there are unique benefits specific to one’s employment, such as flight privileges, it is worthwhile to claim for specific performance as a remedy and, in the alternative, the value of such a benefit as compensation for its loss. 

If you have any further questions or wonder whether this case may apply to you, we encourage you to contact one of our team of experts to assist you moving forward.

This was written by Boris Alexander, Employment Lawyer at Monkhouse Law.

If you have questions about your rights or entitlement to notice of termination, please contact Monkhouse Law Employment Lawyers.

Monkhouse Law is an employment law firm located in Toronto with a focus on workers’ issues. Give us a call at 416-907-9249 or fill out this quick form. We offer a free 30-minute phone consultation.