Airline attempts to recover training costs for pilots who resigned
A New Zealand airline has been ordered to repay training bond costs to two of its former pilots after the Employment Relations Authority (ERA) ruled the bonds amounted to unlawful employment premiums under the Wages Protection Act 1983.
The ERA ruled that Qantas Airways subsidiary Jetconnect Limited also breached its collective agreement with the New Zealand Airline Pilots' Association (NZALPA) when it required pilots Mark Nicholas and Benjamin Rosser to sign bond agreements worth up to $37,000 as a condition of employment.
Both pilots already held a Boeing 737 type rating before joining Jetconnect, yet were required to repay a proportion of their initial training costs if they left within 36 months. Both resigned before that period elapsed to take up higher-paying roles at other airlines.
Jetconnect's training bond
Nicholas and Rosser had previously flown the B737 for Virgin Australia through its New Zealand employment entity before losing their jobs in April 2020, when Virgin Australia terminated its trans-Tasman services during the COVID-19 pandemic.
Both were later offered conditional employment by Jetconnect in 2022, on the basis that they signed a bond agreement and successfully completed the airline's mandatory initial training.
Jetconnect's initial program covered ground school, flight simulators, and line training. It argued the bonds were lawful because the training produced an "executable licence" and approximately 50 additional hours of flying time that made the pilots more attractive to future employers.
Nicholas signed his bond agreement in June 2022 and resigned in December 2023. Rosser signed in August 2022 and resigned in mid-2024.
When Nicholas and Rosser left without completing their bond periods, Jetconnect sought to recover the costs.
Nicholas entered into a repayment agreement and made payments totalling a pro-rata amount of $17,165.30. Rosser had approximately $5,155.55 deducted from his final pay. Both disputed the bonds' legality, prompting NZALPA to file proceedings on their behalf.
The ERA's findings
The ERA rejected Jetconnect's arguments, finding the training covered by the bonds produced no transferable personal benefit for either pilot.
"The benefit of the training bond therefore runs one way, namely to Jetconnect only," the ERA ruled.
"The flying hours Mr Nicholas and Mr Rosser gained were a natural consequence of their employment as commercial pilots, so did not arise from a recognised qualification or transferable benefit they should have paid for. Jetconnect benefited because it generated revenue from the two pilots flying its B737s."
The ERA further noted that the CASA approval process completed through Jetconnect's program was non-transferable, meaning a new employer would require the pilots to undergo equivalent training from scratch regardless.
"The training Jetconnect provided Mr Nicholas and Mr Rosser was a normal benefit of being employed by Jetconnect, because it was specific to Jetconnect and Qantas Group pilots," the ERA said.
The ERA also noted that evidence before it established the bonding of pilots to cover operator regulatory costs was "unheard of," with Jetconnect's own witnesses unable to provide a single example of the practice occurring elsewhere in the world.
The authority declared the Bond Agreements unenforceable and ordered Jetconnect to repay any premiums already collected, with interest running from the date each pilot's employment ended. The parties were directed to agree on the exact repayment amounts.
