Legal protection of investment in pilot education

Posted by: 11. 4. 2022
Update: 12/6/2024

The performance of the profession of a pilot, whether commercial or transport, is connected with the necessity of completing a series of trainings leading to the acquisition of the necessary qualifications, as well as the renewal (maintenance) of these qualifications. There are significant costs associated with this. Most of the (future) pilots are those for whom the expenditure of such funds can be quite problematic. In practice, it can be found that air service providers will provide the appropriate training to such an interested party, either by their own efforts or through third parties. The entity financing such training is then logically interested in the fact that the pilot trained by it performs for it the activity for which it was qualified and does not leave "without further ado" to provide its services to a competing entity. Let's take a look at what options the law offers to protect investments in obtaining (increasing) a pilot's qualification.

The options for protecting investments in pilot education depend on the legal relationship between the pilot and the air service provider. In principle, we distinguish between labor relations and civil relations, or commercial law.

1. Labor relations

According to the relevant aviation regulations, the employment relationship of a pilot can only be established on the basis of an employment contract.

The employer can negotiate a qualification agreement with the employee as a guarantee of reimbursement of the costs incurred in connection with increasing the qualification, which is regulated in § 234 and 235 of the Labor Code. The agreement must be in writing.

The qualification agreement is concluded in connection with an increase in qualifications. It can also be concluded when furthering the qualification, but then the estimated costs must reach at least CZK 75.

By increasing the qualification according to § 231 ZP, it means a change in the value of a qualification, as well as its acquisition or extension. It is study, education, training, or another form of preparation to achieve a higher level of education, provided, however, that they are in accordance with the employer's needs. A qualification increase is a change in the value of a qualification (i.e. a new level of an existing qualification), i.e. obtaining a completely new qualification or expanding an existing qualification by a new level.

By deepening the qualification is an addition to the qualification that the employee already has and which he uses to perform his work. The employee thus does not acquire a new qualification. Deepening is the addition, maintenance or renewal of already acquired theoretical or practical knowledge.

The question is which types of training will lead to "increasing qualifications" and which will only be "deepening qualifications". We believe that most of the training will fall into the category of "enhancement of qualifications". For example, if a private pilot (holder of a PPL license) decides to obtain a higher level of qualification, such as a Commercial Pilot License (CPL), or an Air Transport Pilot License (ATPL), or a Flight Instructor License (FI).

On the contrary, training, the result of which will be the acquisition of authorization for another type of aircraft, the so-called type rating (TR), in our opinion, will fall under the term "qualification deepening", however, taking into account the amount of costs spent on obtaining a new type rating, when these in most cases exceed the above-mentioned amount of CZK 75, it will be possible to conclude a qualification agreement here as well.

The deepening of the qualification will then be the so-called repetitive, resp. refresher training required to maintain the pilot's ability to fly the given type(s) of aircraft.

In our opinion, training such as instrument rating (IR) for VFR pilots, multi-engine aircraft qualification (MEP) for single-engine aircraft pilot license holders (SEP) can be debatable, however, with regard to the amount costs required for obtaining (extending or deepening) the given qualification, which exceed the amount of CZK 75, in our opinion, the distinction will not be so significant.

The subject of the qualification agreement is the employer's obligation to allow the employee to increase or deepen his qualification and, on the other hand, the employee's "stabilization" obligation to remain in the job with the employer for the agreed period (but no longer than 5 years). If the employee fails to fulfill this obligation and the employment relationship is terminated on his part, he is obliged to reimburse the employer for the costs incurred, proportionally according to how much he reduced the stabilization obligation in violation of the qualification agreement. The qualification agreement needs to be concluded before the start of the provision of the qualification, as the costs incurred for increasing (deepening) the qualification are considered to be only those costs incurred after its negotiation.

The agreement must contain mandatory requirements. The first essential requirement is the type of qualification and the method of increasing or deepening it. In the agreement, it is necessary to precisely define the qualification and the method of its increase (deepening), for example a specific form of training or by completing a specific course and designation of the training organization (which can also be the employer himself), obtaining a certificate or license, etc. The second essential requirement is the time during which the employee undertakes to remain employed by the employer after increasing (deepening) the qualification.

The employee's commitment to remain in the job starts from the increase (deepening) of the qualification. The above maximum duration of stay does not mean that each qualifying agreement can be negotiated for a duration of 5 years. This period of stay must be determined with regard to the length of the expected training or study as well as the amount of expected costs for increasing (deepening) the qualification. It is true that the longer the study and the higher the costs, the longer the stay, and vice versa. Therefore, if a maximum period of stay of 5 years were agreed, but the length of study or costs were at a lower level, it would be possible to conclude that the length of the qualification agreement is unreasonable and is therefore invalidly negotiated in violation of the law.

The third essential element is the types of costs that the employee will be required to pay and the total amount of costs that the employee will be required to pay in the event of a breach of the obligation to remain in employment. These costs can be compensation for wages or salary for the period of work leave for study, if it was provided. Additional costs that may be requested for reimbursement may include, in the event that the upgrading of qualifications is carried out by an external entity different from the employer, the travel allowance provided pursuant to § 151 et seq. of the Labor Code, input or course fees, contributions to teaching aids, etc.. In the event that the training is provided "self-help", i.e. through means of production owned or used by the employer, compensation for the costs of operating these means of production of the employer can be requested. In the case discussed here, it will be the cost per flight hour of the airplane (that is, especially the cost of fuel, depreciation, insurance, servicing of the airplane) or the airplane simulator used for training.

The maximum amount that the employer can demand must be stated in the agreement. However, this is not a fixed amount to which the employer is entitled regardless of the actual amount of costs incurred. It applies that in the event of a claim for reimbursement of these costs, the employer can only claim costs in the amount of the costs actually incurred and must properly document this amount. In the case considered here, it will be necessary to document the justification of the composition of costs per flight hour of the given aircraft or simulator used for training. If the employee does not fulfill his obligation only in part, his obligation to compensate the costs will be reduced in proportion to the fulfilled part of the obligation.

The above-mentioned particulars must be stated in the qualification agreement, as the agreement would be invalid without them with regard to the principles of labor law. In such a case, the employee would not be obliged to stay with the employer for the agreed period, nor would he be obliged to reimburse the employer for the costs incurred to increase (deepen) the qualification according to the qualification agreement. It should be mentioned here that it is not even possible to consider the recovery of the amount provided for the increase in qualifications due to unjust enrichment, because according to the decision of the Supreme Court of the Czech Republic (hereinafter referred to as "NS"), in the event of invalidity of the qualification agreement due to legal defects in the agreement, the employer cannot demand employees or unjust enrichment compensation. [1]

The employee's obligation to pay the costs of the qualification agreement does not arise if (i) the employer stopped providing the performance agreed in the qualification agreement in the course of upgrading the qualification, (ii) because the employee became, through no fault of his own, long-term unfit to perform the work for which he was upgrading his qualifications, ( iii) the employment relationship ended with notice given by the employer, unless it is a termination due to a breach of the employee's duty arising from legal regulations relating to the work performed while performing work tasks (it follows that a qualification agreement can only be concluded in the case of an employment relationship, not in the case of agreements conducted outside the employment relationship) or in direct connection with it, (iv) if the employment relationship ended by agreement for the reasons specified in § 52 letter a) to e) of the Labor Code, or (v) if the employee cannot, according to the medical report issued by the provider of occupational health services or the decision of the competent administrative body that reviews the medical report, perform the work for which he/she has improved his/her qualifications, or has lost the long-term ability to continue the previous work due to an occupational accident, occupational disease, or risk of this disease, or if he reached the highest permissible exposure at the workplace determined by a final decision of the competent authority for the protection of public health, and finally (vi) if the employer did not use the qualification for at least 12 months in the last 6 months employee, which the employee achieved on the basis of the qualification agreement.

Another institute that the employer has at his disposal in acquiring and maintaining human resources is non-compete clause. It is an effective protection of the employer against the potential leakage of information to the competition through its (then already former) employees and, if properly and sensitively negotiated, can thus be an effective tool for protecting the employer's business know-how. It is modified in Sections 310 and 311 of the Labor Code.

The subject of the non-competition clause is the employee's obligation to refrain from performing gainful activities that are the same as the employer's subject matter or that would be competitive with him for a certain period of time after the end of the employment relationship. On the opposite side of this agreement is the employer's obligation to provide the employee with reasonable monetary compensation. Considering that by concluding a non-competition clause, the employee significantly limits his future employment options for the period agreed in the non-competition clause (for a maximum of one year), the non-competition clause cannot be validly negotiated without the employer's current obligation to provide the employee with settlement (compensation). The law stipulates only the minimum amount of this monetary compensation, which is half of the employee's average monthly earnings for each month of performance of the competitive obligation (i.e. for a maximum of 12 months). This agreement can be concluded as part of the employment contract when it is concluded, but also at any time later during the duration of the employment relationship.

In addition to this – not one-sided, but mutually balanced – obligation, a contractual penalty may be negotiated as a sanction and a special security measure, but it must be proportionate; with non-fulfillment of the requirement for the adequacy of the agreed penalty (assessed in particular in relation to maintaining equality in the right to do business, from the point of view of the proper meaning and purpose of the non-competition clause itself, taking into account, for example, the duration of the obligation, the consideration provided, the amount of the agreed contractual penalty, etc.) the law connects invalidity of the entire agreement on the non-competition clause. [2]

The non-competition clause must be agreed in writing. When negotiating a non-competition clause, it must be remembered that it must always provide the employee with adequate monetary compensation for refraining from performing competitive activities, while it can only be negotiated if it can be fairly required of the employee, taking into account the nature of the information, knowledge and knowledge of working and technological procedures acquired in employment with the employer. A non-competition clause may be negotiated for a maximum period of one year, it may contain a contractual penalty, which must, however, be proportionate to the nature of the non-competition clause.

2. Civil relations

The relationship between the pilot and the air service provider can be established in some cases outside the field of labor law. These institutes are part of the general civil law and therefore fully apply here the principle of contractual obligation, i.e. what the parties agree on, must be observed. At the same time, they provide less protection to the pilot and do not place such high demands on air service providers, but they also do not provide the same level of legal certainty as labor relations. Considering that this will be a relationship between two business entities, we believe that the existence of a certain degree of aviation authorization will be required on the part of the pilot, which will allow him to forge aerial work for a fee, that is, it will be necessary (if we do not consider the piloting of ultralight airplanes controlled by aerodynamic means) that such a pilot holds at least a commercial pilot's license (CPL, see section 2.4.2.1 regulation L1 - on the qualification of civil aviation personnel).

The appropriate institution for the regulation of pilot-airline service provider relations will be a mandate contract or an unnamed contract based on a mandate contract. The command contract is regulated in the provisions of § 2430 et seq. of the Civil Code. Before today's Civil Code came into force, the mandate contract was contained in the previous Civil Code, and the mandate contract was conceived for commercial relations.

The principal undertakes to procure a certain matter for the principal by means of the principal contract. Thus, the mandate contract allows the principal to entrust a certain matter that he does not want or cannot procure himself to the principal. The subject of the mandate contract is the activity of the principal aimed at the procurement of a certain matter of the principal, not the result of such activity. A fiduciary contract can generally be characterized as a contract of effort rather than a contract of result; we have to start from this essence. Section 2438, paragraph 2 of the Civil Code stipulates that the principal shall provide a reward, even if the result did not occur, unless the failure was caused by the principal breaching his obligations. This also applies in the event that the fulfillment of the order was thwarted by an accident for which the orderer did not initiate.

It states that the principal undertakes to take care of the matter of the principal by the principal contract. The orderer shall provide the principal with remuneration, if it has been agreed or if it is usual, especially in view of the principal's business. At the same time, it is determined that if someone procures certain matters as an entrepreneur, he has the obligation, if he has been asked to procure such matters, to make it clear to the other party without undue delay whether he undertakes the procurement of matters or not; otherwise, they will compensate for the damage caused by it. This is a significant obligation that is established for the entrepreneur, providing the other party with an insight into whether or not they can count on the procurement.

With regard to the principle of freedom of contract, the obligations of the parties to ensure the further training of pilots can be adjusted significantly more freely than in the case of an employment relationship. Even here, however, the general principles of private law must be respected, for example the principle of fair trade and any competition clauses must not be unreasonably restrictive.

The command contract needs to be distinguished from the labor law relationship described above. The employment contract regulates dependent work, i.e. work that is performed in a relationship between the employer's superior and the employee's subordinate, on behalf of the employer, according to the employer's instructions, and the employee performs it personally for the employer. At the same time, it must be performed for a wage, salary or remuneration for work, at the expense and responsibility of the employer, during working hours at the employer's workplace, or at another agreed place. If the above-mentioned signs of dependent work are fulfilled in a specific case, it will not be the activity of a principal on the basis of a contract of employment, but the activity of an employee, since dependent work can only be performed in a basic employment relationship.

záver

The above-mentioned treatise contains an analysis of the basic and main aspects of the regulation of investments in the education of pilots and their protection. We know from practice that each air service provider approaches the given issue differently, with a greater or lesser degree of legal erudition and legal formalism. Given that the investments in pilot education amount to considerable sums and their use by the pilot for an entity other than the aviation service provider that provided and financed the education for the pilot, we recommend paying due attention to this issue and preparing legal documents governing the mutual obligations of the pilot and the aviation service provider services to devote the adequate effort that this issue deserves.

[1] Decision of the Supreme Court, file no. stamp 21 Cdo 891/2010

[2] Judgment of the Supreme Court, file no. 21 Cdo 525/2004

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