The Quebec Court of Appeal has ruled that former unionized Air Canada employees must pursue their claims over flight passes through grievance arbitration, while non-unionized retirees can continue in civil court.
The 2-1 decision released Oct. 27 overturned a lower court ruling that would have allowed all 30,000 retirees to sue together. The majority found that even though flight passes aren’t mentioned in the collective agreement, the dispute falls under the airline’s management rights.
“The monopoly on collective representation by a union is not limited to the context of the collective agreement but extends to all aspects of employee-employer relations,” the court wrote.
The dispute
The representative plaintiff worked for Air Canada for more than 29 years as a unionized employee. She alleged Air Canada granted free and reduced-rate transportation passes to employees and retirees for decades, with priority based on seniority.
Retirees received C2 priority passes. Air Canada then issued B1 and C1 passes to tens of thousands of active employees, “thereby causing harm to the former,” the application stated.
The class sought $5,000 annually representing travel savings, plus damages for stress and displacement at boarding gates, and orders restoring retirees’ priority status.
Majority: covered by management rights
The majority found the practice of granting passes based on seniority falls “inferentially” under Article 3 of the collective agreement, which addresses management’s control and direction of employees.
“The dispute therefore concerns the characterization, scope and potential legal consequences of this practice, including Air Canada’s right to unilaterally modify that practice, as it sees fit, in application of its right of control and direction,” the majority wrote.
The collective agreement states: “Subject to the provisions of this Agreement, the control and direction of the employees, including the right to hire, to suspend or discharge for just and sufficient cause, to advance or step back in classification, to reassign, to transfer, to promote, to demote, to lay off because of lack of work or for other legitimate reasons, is vested solely in the Company.”
The majority ruled determining “whether this management right was exercised reasonably and in good faith falls under the exclusive jurisdiction of the grievance arbitrator.”
Dissent: Air Canada excluded passes from agreement
The dissenting judge found Air Canada consistently maintained the passes were discretionary and outside the collective agreement.
An Air Canada director testified that “year after year, Air Canada has consistently refused to include Personal Travel Allowances in collective agreements concluded with any union.” The airline’s travel director stated the granting of passes “is a matter that is entirely within Air Canada’s discretion which it can modify as it sees fit.”
“Air Canada’s position — both in this proceeding and in other arbitration and judicial proceedings — is that the FRTs are not covered or governed by the collective agreement,” the dissent stated.
The dissenting judge wrote: “Lawyers cannot, by any means whatsoever, transform this express exclusion into an implied inclusion.”
The dissent also noted that “declining the Superior Court’s jurisdiction only with respect to formerly unionized retirees results in different treatment of the two groups, particularly with respect to the limitation periods or time limits applicable to the recourse.”
Air Canada’s jurisdictional challenge
Air Canada didn’t raise the jurisdictional issue when the class action was authorized in November 2022. The Court of Appeal authorized the class but noted in obiter “there may be an issue as to whether those claims fall within the exclusive jurisdiction of a grievance arbitrator.”
Air Canada filed its jurisdictional challenge in January 2024. The trial judge dismissed it in May 2024, ruling the Superior Court could determine whether issuing the passes “gave rise to individual contracts with the unionized class members, or whether this was an abusive exercise of the right of management.”
Outcome
The appeal was allowed in part. The court declared “only a grievance arbitrator appointed under the collective agreement binding between the parties has jurisdiction to hear the dispute for any class member who was unionized while employed at Air Canada.”
No costs were awarded. The court noted it would be up to the parties to apply to redefine the class to include only non-unionized retirees.
The majority stated that “the union’s failure to represent retirees who were formerly unionized employees as regards their demands could potentially be the subject of a recourse” under Section 37 of the Canada Labour Code, though the court made no comment on the merits.
See the full ruling here: Air Canada v. Davies, 2025 QCCA 1344 (CanLII).
