The dust has settled from another pandemic-related termination at Air Canada.
This time, a long-term employee was awarded 24 months’ notice. The Ontario Superior Court of Justice also delved into the wording around pension entitlements at the airline, as Air Canada sought to have her accrual stop on the date of termination — not at the end of the notice period.
The court also commented that “character of employment” is declining in importance when it comes to calculating notice periods, citing a Court of Appeal ruling.
Masayo Williams began working for Canadian Airlines in 1996, which was acquired by Air Canada in 1999. Air Canada considered her start date to be 1996 and she would have reached her 25th anniversary with the company in 2021.
When her employment was terminated on May 25, 2020, Williams held the position of international operations training manager at Air Canada’s head office in Montreal. She commuted to work from her home in Ottawa.
Her job included designing and delivering training programs for customer service staff, performance assessments for new customer service agents and quality audits, among other tasks.
Her annual base salary was $70,380 and she was eligible to participate in the benefits, pension, annual incentive plan (AIP) and profit-sharing plan (PSP).
She also had travel privileges with the airline that it offered to employees. Air Canada maintained these privileges were not part of Williams’ compensation package, but she disagreed.
At the time of termination Williams was 52. She did not accept the compensation package offered by the airline. Air Canada paid her minimum statutory entitlements under the Canada Labour Code, which totaled $11,289.17.
Her search for another job was fruitless. Between June 2020 and July 2021, she applied for 17 positions and secured two interviews. With the assistance of Ontario’s Second Career program, she enrolled in an interactive media management program at Algonquin College in Ottawa in September 2021.
In the spring of 2022, she found a job as a part-time teacher at a Japanese school and as co-ordinator for commercial training with Canada North/Bradley Air Services.
Reasonable notice period
The court looked at the Bardal factors in determining her reasonable notice period.
Williams was 52 and had worked for Air Canada for more than 23-and-a-half years making her, “without question,” a long-term employee.
It noted that, generally, a longer notice period is justified for older, long-term employees.
“In McKinney v. University of Guelph, the Supreme Court of Canada observed that “barring special skills, it is generally known that persons over 45 have more difficulty finding work than others,'” it said.
Williams delivered an average of 20 to 30 training courses per year for Air Canada. Each course included one to 15 people and lasted from three to 14 days. Air Canada acknowledged her skill set and her ability to deliver training to people of diverse cultures, with different skill levels, in a wide range of positions.
Air Canada said the reasonable notice period should be set at 12 months. It noted she had no direct reports and her role, while it had managerial characteristics, it was within the lower half of the hierarchy at the airline. The court didn’t agree.
“It seems to me that Air Canada unduly emphasizes the character of Ms. Williams’ employment, and thereby diminishes the importance of her age and length of tenure, to minimize the reasonable notice to which she is entitled,” it said.
It also noted that “character of employment” is a factor of declining relative importance, something the Court of Appeal for Ontario noted in Di Tomaso v. Crown Metal Packaging Canada LP.
It said Williams was terminated as a result of the pandemic, and the economic uncertainty caused by it is a factor that may lengthen an employee’s notice period.
Therefore, she was entitled to damages at the higher end, and it awarded 24 months.
Air Canada took the position that, absent evidence of actual losses, Williams was not entitled to damages for group benefits. If that didn’t hold up, then she should only receive compensation for the cost of replacement benefits.
Linda De Quintal, Air Canada’s senior manager of global benefits, said it would cost $327.70 per month for Williams to get coverage in Ontario with a co-applicant.
The court said that fixing benefit as a percentage of salary can be appropriate. But since Air Canada showed a comparable plan, and it was unchallenged, it used that as a figure. It awarded a total of $7,864.80 — which is $327.70 per month multiplied by 24 months.
Williams sought pension contributions and recognition of service during the notice period.
Air Canada argued the terms of its pension plan are clear and do not allow for the inclusion of amounts payable subsequent to termination of service. It calculates monthly pension payable based on “allowable service.” It said that only time that an employee is paid “compensation” — which excludes “any amount payable subsequent to or on account of the termination of service.”
But for the termination of Williams’ employment, she would have been entitled to pension contributions as a component of her compensation during the notice period, the court said.
“The question then is whether there are clear and unambiguous contractual terms limiting Ms. Williams’ right to pension accrual over the notice period,” the court said.
It’s answer? No, it was essentially ambiguous. The court awarded pension contributions and recognition of service during the 24-month notice period.
AIP and PSP payments
In 2019, Williams received an AIP of $10,299 and a PSP of $2,002.84.
In 2020, Air Canada had its worst financial year ever, operating at a loss of $3.8 billion. As a result, no payments were made under AIP or PSP.
Air Canada said it was “possible” that payments to employees could be made during fiscal 2021 and 2022.
Williams, recognizing that nothing was payable for 2020, sought $6,150.92 — “possible payments” for the 17-month period of her notice that fell outside fiscal 2020.
The court ruled Williams was entitled to AIP and PSP payments, but only if they are made by the airline to its employees for those fiscal years. It said she was not entitled to fiscal 2022 payments.
“Taking May 25, 2022 as the ‘Termination Date’ – the end of the 24-month reasonable notice period – both plans are clear that all entitlements unpaid as at that date “shall be cancelled,'” it said.
Travel privileges and service anniversary award
Williams sought be enrolled in the airlines travel privileges program and to receive her 25th anniversary service award. She said she would have been eligible for the award, and the program afforded to retirees, by the end of the notice period.
Air Canada opposed the bid, stating that the privileges are not contractual benefits and that she is not a retiree.
The court sided with Air Canada. There was no evidence the program or service award were contractual benefits. There is no mention of them in the terms and conditions letter confirming her appointment to the international operations training manager position.
“The evidence establishes that travel passes are provided by Air Canada on a gratuitous basis – they are, in essence, “standby travel” and do not guarantee a right to fly,” the court said. “Travel passes are subject to onerous restrictions and conditions, and pass holders are subject to deplanement.”
Air Canada retains the right to revoke the privileges. That’s very different from the language and policy around the AIP or PSP, it said.
It dismissed this portion of her claim, plus a claim for $795 in damages for out-of-pocket expenses she incurred during the notice period.
“The travel privileges were, just that, privileges,” it said.
Air Canada sought a 50 per cent reduction in the notice period for failure to mitigate damages.
The court, though, said it did not prove Williams failed in her duty.
“Her efforts included receiving job alerts, attending career counselling, and preparing her resume – something she had not had to do in 24 years,” it said. “She began applying for positions within two and half months of termination. I find that in the circumstances, which also included the COVID-19 pandemic, Ms. Williams’ efforts to prepare to re-enter the job market were reasonable.”
It did deduct income Williams earned from a new job during the mitigation period.
Damages were calculated as follows:
- Base salary: $140,760 ($5,865 x 24 months)
- Benefits: $7,864.80 ($327.70 x 24 months)
- Less payments under Canada Labour Code: $11,289.17
- Less mitigation income: $4,563.30.
It also declared she was entitled to AIP and PSP payments made, if any, for fiscal 2021.
For more information, see Williams v. Air Canada, 2022 ONSC 6616 (CanLII).