Mar 15, 2021
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In a major victory for former Aveos employees, the Federal Court approved a class action settlement in the amount of $1.9 million on February 3, 2021. This class proceeding followed from a complaint and judicial reviewing involving former employees of the large aircraft maintenance company Aveos, which shut its doors in 2012, terminating thousands of employees. This settlement puts an end to a long and unfortunate saga which saw six former Aveos directors attempt to skirt what was alleged were their obligations under the Canada Labour Code (the "Code") to pay unpaid wages.

Under Part III of the Code, employees of federally-regulated businesses are afforded certain minimum protections in respect of wages, vacation pay, termination pay, and severance pay.

For example, the Code provides that an employee who is let go from their employment with three months or more of service is entitled to at least two weeks' notice of their termination (or wages in lieu). Further, an employee who is let go with at least 12 months of service or more is, on top of this termination pay, also entitled to the equivalent of two days pay for every year for which they were employed as severance.

These provisions recognize the inherent power imbalance between employees and their employers and thus codify a minimum remedial "safety net" meant to protect workers from abusive employer practices.

The Code further recognizes that it may be impossible for employees to collect the minimum wages and other amounts owed to them from a corporation that is insolvent. The Code thus provides that the directors of an insolvent corporation can be made personally liable for the amounts owed to employees, who may have worked diligently for the corporation for years only to be robbed of the minimum owed to them upon its bankruptcy and the loss of their employment.

It is this liability that was at root of the litigation recently concluded between six former Aveos directors, 1,960 of its ex-employees, and their union, the International Association of Machinists and Aerospace Workers ("IAM"). Aveos shut down its operations due to insolvency in March 2012, terminating large numbers of employees. The company's former directors had been attempting to avoid their liability to pay unpaid wages, vacation pay, termination pay, and severance owing since at least 2016, when a Labour Program Inspector found the directors personally liable for Aveos's debts to its former employees.

The directors contested the Inspector's decision before an arbitrator. The directors made a number of technical legal arguments to avoid liability, including that, as four of them had quit just three minutes prior to the termination of Aveos employees, they could not be held responsible for the liabilities arising from those terminations. Although the arbitrator dismissed these arguments, the directors again attempted to avoid making the required payments, instead seeking to have the abitrator's decision overturned in Federal Court on a judicial review application.  It was in Federal Court that the parties creatively certified the judicial review application in such a way that all of the employees could benefit from legal representation from lawyers acting for one particular employee.

Thankfully, as a result of the persistence of ex-Aveos employees, their union, and their representatives, a class settlement was finally reached between the parties in the amount $1.9 million. Upon approving the settlement, the Federal Court commented that, assuming a reasonably high take-up rate, ex-employees should see most, if not all, of the wages owed paid to them.

Cavalluzzo is very proud to have represented the IAM and some of their members on what was a complex and important judicial review application and to have secured this settlement on their behalf.

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