Lifelong flight privileges and 24 months severance for wrongfully dismissed Air Canada employee

Ruel v. Air Canada

If you have been to Pearson International Airport in the last couple of months, you must have noticed the complete disarray. Bags everywhere, lines out the door. This is a repercussion of COVID-19’s unfortunate devastation of the airline industry.

Air Canada, as well as many other airlines, have been struggling for over two years during the pandemic. Consequently, Air Canada decided that it must terminate a large portion of its staff to deal with the impact. Mr. Ruel was one of the individuals terminated from Air Canada in June 2020.

Facts

• Ruel was 52 years old and was employed by Air Canada for approximately 25 years as a Director for Consumer Experience at Pearson International Airport.
• Ruel earned a significant compensation package from Air Canada in exchange for his services to the airline, including:
  • A base salary of $117,060.00
  • A discretionary annual incentive bonus (“AIP”) of $35,000.00
  • Participation in Air Canada’s Long-Term Incentive Plan (“LTIP”), whereby shares were issued at a value of 15% of his base salary in 2019 and 20% in 2020 and for the foreseeable future
  • Enrolment in Air Canada’s defined benefit pension plan
  • Coverage under Air Canada’s health benefits program; and
  • Eligibility for travel privileges including retiree travel privileges upon attaining 25 years of service.
• Nevertheless, Air Canada terminated Ruel with much less than what he deserved, which is typical. Upon termination, Air Canada paid Ruel his statutory pay in lieu of notice in the amount of $3,136.51 in addition to the amount owed for statutory service under the Canada Labour Code (CLC) in the amount of $21,537.19.
• Ruel realized that this was far less than what he was owed according to the law. Therefore, he commenced a wrongful dismissal lawsuit seeking damages valued at $1,800,000.00 for both tangible and intangible elements of his compensation.

Court Decision

The Court utilized the typical factors for assessing reasonable severance pay, including, Ruel’s age, his position, his length of service, and the availability of similar work in the job market. The Judge noted that the airline industry in particular had been decimated by the pandemic, which would surely impact Ruel’s ability to reemploy.

In reviewing all of these factors, the Court awarded two years of severance pay, and 10% in lieu of benefits over this two-year period. Additionally, Ruel was awarded loss of group health benefits, lifetimes retiree benefits, LTIP benefits, accrued pension benefits, and a remedy of specific performance for retiree travel privileges.

This award is far more than what Air Canada provided Ruel upon termination.

ADDITIONAL RESOURCES
• Severance Pay in Ontario
• Severance for airport workers
• Ontario extends IDEL until March 2023: Know your rights

Takeaways for Employers

• Severance pay in poor economic conditions: Even in a recession or otherwise difficult times, employers still owe terminated employees the severance pay they deserve according to the law.
• What to consider when calculating severance: Bonuses, travel benefits, stock options, and other such entitlements which may exist are included in an employee’s compensation package and must be provided as part of a reasonable severance package. Base pay alone is not going to cut it.

Takeaways for Employees

• Consult with a lawyer:  It is always worthwhile to have an employment lawyer review your severance package before you accept it. You may be leaving significant compensation on the table if you accept a package that is beneath what you’re owed.
• A company’s financial struggles do not mean you don’t get severance: While it is unfortunate that your employer may be struggling financially, you do not have to suffer the repercussions of that. You are still entitled to a fair and reasonable severance package.