Canada: Bond: Training Bond

Last Updated: February 16 2016
Article by Darryl Pankratz

New employees are often subject to probationary periods during which their suitability for employment is evaluated. Probationary periods are defined periods of time (which are often for three months but can be longer) that are established at the beginning of employment. One purpose of probationary periods is to give the employer a reasonable opportunity to determine if the employee is qualified and suitable for the job. They will often provide an employer the ability to terminate the employee without cause and without the normal obligations of providing notice or severance. If a probationary period is longer than three months, the normal notice and severance provisions of the Employment Standards Act apply.

New pilots are often hired subject to probationary periods, and airlines and other operators may incur significant costs related to aircraft type certificate training of new pilots before they can fully assess them for permanent employment. As such, many employers choose to have new pilots sign a "Training Bond Agreement", which requires the employee to repay the costs of the training in the event that he or she is terminated during the probationary period. The significant cost of training can thus be shifted onto the pilot, which can impose financial hardship in the event that they are not kept on by the airline or operator.

In the recent British Columbia Supreme Court decision of Langford v Carson Air, the Court considered the enforceability of a Training Bond.  Ms. Langford was hired by Carson Air as a First Officer in August 2012. She signed a Training Bond that estimated the cost of training at $25,000 (the "Bond"). The Bond provided that she would repay the full amount owing to Carson Air if she resigned or her employment was terminated. During her six-month probationary period, Ms. Langford was terminated. She brought an action against Carson Air seeking damages for, among other things, wrongful dismissal, and Carson Air counter-claimed seeking re-payment of the cost of training.

The Court confirmed that the termination of a probationary employee during his or her probationary period can be based on a decision that the employee is unsuitable for the job.  Such a conclusion must be reasonable and properly motivated, reached only after the employee has been given a fair opportunity to demonstrate his or her suitability.

Carson Air successfully argued against Ms. Langford's claims of wrongful dismissal and outlined a number of reasons for which it terminated her employment. For example: she did not have a proper license when she was sent for training in Texas because she had not completed a medical examination; she brought her dog into the office without permission; and she flew illegally without proper licensing for a period of 6 weeks, which put the company into an issue with Transport Canada.  Here, Carson Air was entitled to assume Ms. Langford held a valid pilot's license when she applied for employment as a First Officer.

With respect to the Bond, the outstanding balance of Ms. Langford's training was $23,408.64. She argued that the Court should not give effect to the Bond because she was jet-lagged and did not feel comfortable when she signed it. She was asked to sign the Bond along with other new pilot recruits. She suggested that her signature on the Bond was not voluntary (that she signed under duress) because she was pressured to sign it in those circumstances. However, the Bond contained a term whereby Ms. Langford agreed she had been given the opportunity to seek advice about its terms. She did not attempt to contact or talk with anybody about her concerns. Accordingly, she failed to establish the elements for the defence of duress, and the Court allowed the counter-claim, ordering her to repay the amount of $23,408.64.

The Langford case is significant in that the Court ordered Ms. Langford to repay a significant amount of money to her former employer even though she was terminated near the end of her probationary period. Carson Air successfully demonstrated that it had proper reasons to terminate Ms. Langford's employment and that the termination was not motivated by an improper purpose. Accordingly, the case confirms that Training Bonds may be enforceable where an employee is properly terminated during a probationary period, and where the Training Bond properly advises the employee that he or she can seek advice about its contents.

In the aviation industry, employers who wish to use probationary periods and Training Bonds, and employees who are asked to sign these documents are encouraged to consider the following questions:

  • Do the new employees understand that their employment is subject to a fixed probationary period, during which time their skills and suitability will be evaluated?
  • How will performance and suitability be evaluated? Have formal evaluation processes been implemented and carried out during the probationary period? Do they include opportunities to provide the employee with feedback and provide him or her with the opportunity to modify behaviour?
  • What are the estimated training costs? If you are an employee, does this amount seem reasonable, would you have the means to pay it back, and over what period of time?
  • Does the Training Bond contain a clause where the employee acknowledges that he or she has the opportunity to seek advice? As an employee, have you exercised your right to seek that advice?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Darryl Pankratz
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