Training bonds in the aviation industry - update
The issue of training bond agreements is becoming increasingly important in the aviation industry due to pilot and engineer shortages which are causing employees to seek out new employment prior to the expiration of the terms of their training bonds.
This update sets out the key requirements for training bond agreements and the steps that can be taken if an employee resigns without repaying the bond amount.
Pilots
The Air Pilots Award was amended in 2020 to expressly permit operators and pilots to enter into training bond agreements provided the training is for a class or type rating or upgrade training and the following conditions are met:
(i) The training bond must be agreed between the employer and an individual pilot.
(ii) The training bond must be in writing, specify the amount of the bond, and be signed by the pilot prior to commencing training.
(iii) The maximum term of the training bond will be 2 years for piston engine/turbo prop aircraft and 3 years for jet aircraft.
(iv) The training bond amount cannot exceed 50% of the actual cost of the training.
(v) The training bond amount reduces on a monthly pro rata basis over the term of the training bond when the pilot successfully checks to line.
(vi) A pilot can be subject only to one training bond at a time. Where a pilot is subject to one training bond, and subsequently enters into another, the bonds are not cumulative and the highest value training bond will apply.
(vii) The employer can recover an amount payable under a training bond only where the pilot resigns ,or, subject to the provisions of clause 13.6(a)(viii),the pilot’s employment is terminated for serious misconduct.
(viii) No amount can be recovered in the case of redundancy, loss of medical licence by the pilot, termination of employment by the employer (except where the termination is because of serious misconduct and there is no later finding by a court or tribunal, or acceptance by the employer ,that the employee did not engage in the serious misconduct on which the termination was based) or where the pilot fails the training course.
(ix) A training bond cannot be entered into in circumstances where an employer directs a pilot to undertake training.
When entering into a training bond agreement with a pilot, it is important to:
Ensure it is clear that the pilot is not being directed to undertake the training but is undergoing the training voluntarily;
Carefully set out the actual costs of the training and ensure that the amount of the training bond is 50% of that amount; and
Ensure the training is for the purpose of obtaining a class or type rating or is upgrade training.
Provided the training bond agreement complies with the Award, it is a legally enforceable document and if the pilot resigns during the training bond period they will be required to repay the bond amount as a debt.
LAMES
The Ground Staff Award 2020 does not include specific provisions dealing with the issue of training bond agreements but these agreements are commonly used for LAMEs undergoing class and type rating training.
While there are not specific requirements in the Award, it is important to ensure that any training bond document clearly sets out the agreement between the engineer and the operator, including:
The class or type endorsement which the LAME will obtain;
That the training has not been directed by the employer but is done voluntarily;
When the bond amount will begin to reduce (usually after the completion of the training); and
The circumstances when the bond amount will not be repayable eg redundancy.
The ALAEA take the position that training bonds which relate to theory only training are not enforceable. This position has not been tested in Court. In these circumstances, operators who are considering offering training bond agreements for theory only training (as opposed to class or type rating training) should carefully consider their position and should expect that there will be resistance to the enforcement of these agreements.
Enforcement
Where an employee has left employment during the term of their training bond agreement, the following steps can be taken to recover the amount owing on the training bond:
The first step is to write a letter to the pilot demanding payment of the training bond amount. For training bonds relating to pilots, a careful review of the actual costs of the training should be undertaken at this time to ensure that the bond amount is not more than 50% of the actual costs incurred; and
If the amount is not paid in response to the letter, legal proceedings can be issued for the recovery of the training bond amount along with interest and legal costs. Proceedings will usually be in the Local Court of the State where the pilot was employed.