Compensation order triggers debate

Updated: 2006-11-10 22:07

SHANGHAI -- A senior pilot has been ordered to pay China Eastern Airlines (CEA) 1.7 million yuan (212,500 U.S. dollars) in compensation after he resigned the company for personal reasons.

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Shanghai Labor Dispute Arbitration Commission ruled that the pilot captain was liable for the costs of his training under the terms of his "unfixed"contract.

The captain, whose name was suppressed by the commission for privacy and safety reasons, handed in his resignation early this year, but China Eastern Airlines rejected it.

The captain studied and trained at the Civil Aviation Flight University of China in the 1990s after signing a contract with China Eastern Airlines to serve the company after graduation. He was promoted to captain after 10 years.

Xiang Wujun, a labor lawyer with Beijing-based Zodiac Teamer Law Firm,said such lifetime contracts were usually made to protect employees in the face of China's high urban unemployment rate.

"But here, the contract is made more in the interests of the airline company because it is really costly to train a pilot let alone a captain," Xiang said.

Under the terms of an "unfixed" contract, compensation must be made if either party terminates it without special reason, for instance, the deeds of employees causing unredeemable losses to a company, said Xiang.

Chinese aviation experts reckon the cost of training a civil airline pilot at a minimum of 2 million yuan (250,000 U.S. dollars), with the costs rising for training up to the rank of captain.

During the arbitration, the captain agreed to pay compensation within "a reasonable scope" considering the company's expenses.

However, he insisted he had given CEA 30 days written notice of his resignation, so he did not violate China's Labor Law.

CEA argued the captain was a "specialist" trained by the company at great expense.

It had invested a large sum of money and other resources in putting the man through university, helping him acquire his pilot's licence and qualify as a captain, so his resignation would cause huge losses.

The company demanded the pilot repay charges exceeding 10 million yuan (1.25 million U.S. dollars).

The commission ruled the captain's contract termination was lawful, but ordered him to pay 1.7 million yuan in compensation to the company.

The sum included 715,000 yuan (89,375 U.S. dollars) in tuition costs at the Civil Aviation Flight University of China and about 400,000 yuan (50,000 U.S. dollars) in pilot training charges.

The commission said the compensation was decided according to rules set by the General Administration of Civil Aviation of China (CAAC) last year.

Under the rules, a pilot's resignation is only valid if approved by his or her initial airline employer. The pilot is also required to pay compensation of 700,000 to 2.1 million yuan (87,500 to 262,500 U.S. dollars) for training expenses.

The administration made the laws after a spate of resignations from state-run airline companies since 2004.

More than 100 pilots have submitted their resignations in the past two years to seek "better pay and conditions" in privately-run or foreign-funded airlines.

Fourteen pilots and captains left Hainan Airlines in 2004 to take up jobs at Okair. Nine captains from CEA collectively resigned in November 2005 and paid 15 million yuan (1.88 million U.S. dollars) in compensation to work for the same private airline.

In June this year, six captains from CEA held a hunger strike to protest the company's "unacceptable compensation demands".

The monthly salary of a state-run airline pilot is about 12,000 yuan (1,500 U.S. dollars) and about 25,000 yuan (3,125 U.S. dollars) for a captain. Their earnings can double in private or foreign firms.

So far, neither the pilot nor CEA have announced plans to appeal and it is still unknown whether the captain himself or another airline company will pay the compensation.

The relatively high pay reflected the demand for pilots, said Prof. Cheng Yanyuan, of Chinese People's University's Labor and Personnel School.

Currently, China has about 11,000 pilots, flying about 800 aircraft. The CAAC estimates Chinese airlines will need another 10,000 pilots in the next five years as the industry expands to become the world's largest.

Cheng said his resignation will again trigger a national debate on the ethics and rationale of professional contracts.

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