Air Canada union irate following collection agency threat

Overpayments to staff for meal allowances totalled about $600,000
By Uyen Vu
|Canadian HR Reporter|Last Updated: 01/17/2005

In a move not often seen in employee relations, Air Canada threatened to turn to a collection agency to recover meal allowances it had overpaid to some 5,100 employees.

The company has since backed off from this threat, but the move generated considerable bad press for Air Canada.

The problem started with an “inputting error” in May that resulted in 5,100 flight attendants being paid for meals that they weren’t entitled to. Some overpaid amounts were as little as $20, but the total was about $600,000.

“The issue for the airline was the amount of overpayment was deemed to be significant enough that it would be really irresponsible of us not to try to recover the funds,” said Air Canada spokesperson Laura Cooke.

The airline approached the Canadian Union of Public Employees local representing flight attendants in July for co-operation in the matter but were “unsuccessful,” said Cooke.

On Nov. 26, the company issued a letter to flight attendants, asking the employees to either sign a form authorizing the company to recover the overpayment from their Jan. 17, 2005, paycheques, or to remit personal cheques for the overpaid amounts.

Failure to do either by Jan. 1 this year “will result in your file being placed in the hands of a collection agency. You should be aware that this action may have an adverse effect on your personal credit status,” states the letter.

Asked whether the airline regretted such a move, Cooke said only, “we were forced to take an unfortunate and unnecessary step.”

In a followup letter to employees dated Dec. 6, however, vice-president of customer experience Susan Welscheid stated that in her view, the Nov. 26 letter “should not have raised the possibility of using a collection agency to retrieve these monies.”

Pamela Sachs, president of the Air Canada component of the Canadian Union of Public Employees, said what the union asked for all along was a breakdown of the overpayment.

“It’s not that we weren’t being co-operative. We had no information,” said Sachs.

“It’s an extremely time-consuming process if you have to go back and pull out all the files for 6,500 people. And they didn’t say that was the reason but we know that’s the reason. Air Canada had cut staff in all departments, and the few people who are left are doing all the work, and that’s a humongous task.”

Commenting on the case, Toronto-based HR consultant Ian Turnbull said the threat of collection only prodded an open wound that still needed to heal after the difficult process of restructuring out of bankruptcy. But, he added, “I’m not sure Air Canada had a way to win this.”

If the company hadn’t tried to recover the money, “it would have been setting up an unfortunate precedent. But from the perspective of employee relations, did they do it as well as they could have? Employees don’t react well to threats.”

Turnbull doubts that the company would have faced any privacy issues in turning to a collection agency, even though using such a service would have required the company to pass on the flight attendants’ personal data to the agency.

“The collection agency would have been acting as an agent for the company. But you never know. These are still the early days of the (federal privacy) legislation, and if someone issued a complaint, it’s possible that the commissioner would find for the complainant. But I don’t think so. I think the decision would be that companies are allowed to use this kind of process.”

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