An Air Canada worker who was let go at the start of the COVID-19 pandemic has been awarded more than $500,000 by an Ontario court — including 24 months’ pay in lieu of notice.
Roland Ruel was an executive with managerial responsibilities, had been at the airline for nearly 25 years and was one month shy of turning 52 when he was let go on June 15, 2020.
As the Ontario Superior Court of Justice noted, the pandemic brought massive upheaval to the air travel sector.
“Airline carriers experienced massive losses and Air Canada was no exception, experiencing the worst financial crises in its eighty-year history. It took measures to stem its losses, including cutting its workforce,” it said.
On June 4, 2020, Ruel was advised he was being let go effective June 15, 2020. As a federally regulated employer, Air Canada is governed by the Canada Labour Code — and two weeks is the minimum notice period required under that legislation.
He was also offered a severance package, which was explained in his termination letter and in Air Canada’s COVID-19 Pandemic Involuntary Separation Program. He declined the package and filed a lawsuit.
The airline then paid $3,136.51 (statutory pay in lieu of notice) in addition to the amount owed for statutory service under the Code in the amount of $21,537.19.
At the time of dismissal, Ruel’s salary and compensation consisted of:
- Base salary of $117,060.
- Discretionary bonus (AIP) of $35,000.
- Participation in Air Canada’s Long-Term Incentive Plan (LTIP) with shares issued at 15 per cent of his base salary in 2019 and 20 per cent in 2020 (and for the foreseeable future).
- Enrolment in Air Canada’s defined benefit (DB) pension plan and its health benefits program.
- Eligibility for travel privileges, including retiree privileges upon attaining 25 years’ service.
Ruel sought 24 months’ reasonable notice, damage for lost bonuses, accrual of pension benefits and spousal survivor benefits, group health benefits and compensation for various post-retirement benefits (which he would have been entitled to had he received reasonable notice.)
Air Canada said 16 to 17 months was a more appropriate range, with a deduction for Ruel failing to mitigate his damages by finding alternate work. All the other entitlements — such as pension, stock options, etc. — ended when he was terminated in June 2020, it argued.
The court turned to the Bardal factors (character of employment, length of service, age and availability of similar employment) to calculate reasonable notice.
Ruel was almost 52, had been with Air Canada for a quarter century and was a director with managerial responsibilities at Canada’s largest airport, it said.
“(Ruel) was responsible for overseeing 3,500 Air Canada employees, including a team of 45 management operations professionals,” the court said. “He was responsible for Air Canada’s operations center at Pearson International Airport, which regularly saw up to 50,000 passengers on any given day.”
The entire airline industry was hit hard by the pandemic, meaning he would have a very hard time finding a similar job with another organization.
Therefore, an award of 24 months’ pay in lieu of notice was appropriate, it ruled. It did add that Ruel has an ongoing duty to mitigate his damages during the unexpired portion of the notice period.
The AIP bonus
Air Canada did not pay a bonus in 2020 because of the pandemic, and it appears “likely” that no payments would be made for fiscal 2021 either.
The airline operated at a $3.8 billion loss in 2020 and it expects to post a loss for 2021, it said.
The court ruled that, should an AIP bonus be paid in 2021, Ruel would be entitled to it.
Ruel was entitled to the accrual of LTIP shares during the common law notice period, the court said. Essentially meaning he would receive them in the same manner he would have had his employment not been terminated.
Air Canada apparently paid out $10 million in bonuses while it received government funding, something Ruel learned about from an article in the Globe & Mail newspaper.
The bonus was paid to employees and directors. Ruel, at the time of his termination, was a director.
Air Canada said the Globe & Mail article was partly true, but it was difficult to say whether or not Ruel would have received any of that bonus had he still been an employee.
“Air Canada refused to provide any information on the criteria used and whether (Ruel) could have potentially received the bonus the year it was paid out, or to provide particulars of bonuses paid out at (his) level,” the court said.
In short, Ruel was entitled to any payments that would have been made during the notice period. Air Canada should not benefit from its own failure to disclose the existence of the COVID-19 bonus and its particulars, the court said.
It did not rule on the amount that she be awarded for the bonus, calling it “a discrete issue which may also be addressed subsequently by way of a summary trial.”
Ruel said he intended to retire at age 55. An actuary hired by him valued the net loss of pension benefits at $149,531 and $160,148 before and after tax gross-up, respectively.
The loss of survivor benefits was pegged at $23,859 and $27,629 before and after tax gross-up. Air Canada agreed with the calculations.
The court said he was entitled to the grossed up pension amounts.
Air Canada argued it only owed him $789, the health expenses he actually incurred over a 12-month period. Alternatively, it said Ruel should be compensated for the cost of replacement benefits, less the value of his contributions.
Ruel, instead, argued he should get 10 per cent of his base salary. The court favoured Ruel’s argument, stating there was precedent in Ontario for awarding damages for lost group benefits at that rate.
Therefore, he was entitled to $23,412 for lost benefits during the notice period.
Retiree health benefits
Had Ruel worked another 5.83 months, he would have completed 25 years’ service — and both he and his dependents would have been entitled to post-retirement health benefits.
Under the plan, employees are eligible of they either have 25 years’ service; or age and continuous service equals 80; or are age 65. At the time of termination, Ruel met none of that criteria.
Ruel’s actuary calculated the present lump-sum value at $73,361. Air Canada disputed that figure — one of the notable reasons was that Ruel had moved to British Columbia, where plan coverage costs less.
Ruel agreed to Air Canada’s 9.74 per cent value reduction based on the change in provincial residence. The court awarded $73,361, and reduced it by 9.74 per cent.
Lost flight privileges
Ruel’s actuary calculated the cost of this lost benefit as $1,814,775.
The court didn’t bite on that amount, primarily because Air Canada’s retiree flight privileges are just that — “privileges.”
Had Ruel not been terminated, he would have automatically qualified during the notice period.
“(Ruel’s) expert has valued this loss at a little over $1.8 million dollars,” the court said. “In my view, since the travel privileges are subject to modification, amendment and termination by Air Canada, specific performance in the circumstances is warranted as opposed to damages. (Ruel) like all qualified beneficiaries under the travel privileges plan, are subject to the terms and conditions including the possibility that it may be modified or cancelled.”
It also awarded pre-judgment interest on damages. It said it would schedule a case conference to speak to the issue of costs and to schedule a date to address the AIP for 2021 and the COVID-19 bonus identified via the Globe & Mail article.
For more information see Ruel v. Air Canada, 2022 ONSC 1779 (CanLII)