Breaking bonds – the enforceability of training contracts

Initial and recurrent training is a necessary part of operating a safe (and legal) air service. Crew training is an investment in safety, but it’s not cheap. An operator incurs the expense of training so that the crew operating the aircraft for hire or reward is competent and safe. But, the operator also expects to receive a return on their investment, by having competent and well-trained crew stay on for a reasonable period of time after the training. An operator will not be profitable if it must consistently train new staff. 

As a condition of employment, many operators in Canada require pilots to sign a training agreement, or training bond, prior to receiving aircraft-specific training. The basic premise of these contracts is that in exchange for training, the pilot will agree to remain with an operator for a specified period of time (usually one or two years). If the pilot leaves the employ of the operator before that time, he or she is required to pay back a pro-rated share of the training costs. 

Are Training Bonds Legal?

Canadian courts have historically treated training contracts the same way they treat other contracts. Courts have generally found that in situations where a pilot understands and agrees to the terms of a training contract, it will be enforced. For example, in a 2000 decision from the Saskatchewan Court of Queen’s Bench, a first officer on a Jetstream 31 left for a position at another airline. Despite the pilot’s argument that he felt he “had to” sign the training agreement, as he had just bought a house, the court concluded the pilot understood the terms of the agreement and was bound by the contract. 

The pilot also argued that the contract was contrary to the Saskatchewan Labour Standards Act and that the terms of the contract were unconscionable or unduly harsh. The Court did not agree and ordered the pilot to pay the operator the outstanding pro-rated amount of the training expenses. 

Courts will look at the individual circumstances to determine whether a particular contract is enforceable. Below are further examples of some considerations that have arisen in previous decisions. 

In a 1985 Alberta decision, a pilot was fired after complaints of low flying over a populated area. The pilot sued for unjust dismissal and the airline counterclaimed for its outstanding training costs. 

The court found that the pilot was not unjustly dismissed. It also found the terms of the training contract clearly outlined that the pilot was required to reimburse the operator for the training costs should the pilot decide to leave. However, the contract did not require the pilot to reimburse the operator where the pilot’s employment was terminated by the operator. Therefore, even though the court found the operator was justified in terminating the pilot, the pilot was not required to repay the training costs. 

It should be noted that in such a situation, a court will examine the actions of the pilot which warranted dismissal. In this case, a key consideration was the lack of evidence that the pilot’s actions were deliberate in order to provoke a dismissal. 

A common theme in training contract decisions is an employee’s allegations after the fact that he or she was justified in leaving the airline due to unsafe working conditions. Unsafe working conditions may in fact be considered constructive dismissal. However, a simple allegation of unsafe practices (without further evidence of actions taken by the pilot to bring his or her concerns to the attention of the operator) is unlikely to warrant a finding of constructive dismissal. 

In a 2008 decision from Ontario, a pilot commenced work for a charter operator on a Challenger 601. The employment contract contained a training bond for the type rating. From the evidence at trial, it appears there was an ongoing conflict between the captain and the first officer with whom he primarily flew.  

While there were some oral complaints to the operator’s management regarding the first officer, there were no complaints by the captain in writing, other than the captain’s resignation email after he had already secured another job. 

Because there was little to no evidence that the captain brought his safety concerns to the attention of the operator prior to his resignation, the court found the captain liable for the training costs. 

There is a general misconception that if a contract is not in writing, it cannot be enforced. Putting a contract in writing may help prove the terms of a contract, but an oral contract may still be binding on parties. 

In a 1998 decision from the Northwest Territories, a pilot on a Falcon 10 was offered employment after being laid off from a regional carrier. The main terms of employment were agreed by all parties and the court outlined “it was common ground that [the operator] insisted that the pilot make a minimum commitment of two years, and that the [pilot] gave [the operator] that commitment.” 

After 10 months, the pilot gave notice that he had accepted a job with a different operator on a Falcon 10 aircraft. Although the pilot alleged safety deficiencies on the part of the operator in the lawsuit, the court found these allegations were “mere bootstrapping by the [pilot] after-the-fact.” Even though there was no written training contract, the court found the pilot liable to the operator for a proportionate share of the training costs and moving expenses that had been paid by the operator. 

A recent 2010 decision from British Columbia involved a pilot who, after being trained on a new aircraft, advised his employer he had applied to a larger airline and it would be checking his references. The operator questioned the pilot’s commitment to the company and moved him back to his previous position. At this time, after the training had been completed, the pilot signed a training contract with the employer. 

Although the court found that training contracts can be enforceable, it concluded that because the training had already taken place, one of the essential legal elements of contract formation had not been satisfied – in order for a contract to be formed, there has to be a future benefit to each party. The pilot was not receiving any new benefit from the contract when it was made, as the training had already been completed. Therefore, the court found the training contract was not an enforceable contract. 

Generally speaking, training contracts are enforceable. However, courts will examine the circumstances of each situation to determine whether the proper contractual elements exist. The terms of the contract, the benefit for each side, the facts relating to the end of the employment relationship, and the amount claimed in the training contract will all be considered. If in doubt, parties drafting or entering into a training contract should seek the advice of a lawyer to review the terms of the contract. Operators should review the terms with prospective employees in a consistent manner, ensuring that each pilot understands the purpose and the importance of the training bond to the employment relationship.