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sophie_lalor-harbord_phIn October last year, the Supreme Court handed down its judgment in case originally brought by Ms Williams and some 2,750 other British Airways pilots concerning holiday pay.

Background

Under their contracts, the pilots were entitled to (i) basic pay; (ii) a “flying time” supplement of £10 per flying hour; and (iii) an allowance per hour of time spent away from their base airport (“TAFB”). However, they received holiday pay fixed at the level of their basic pay only.

The pilots brought claims before the Employment Tribunal for compensation from BA on the basis that the company had underpaid them in respect of holiday pay. They claimed that in paying them holiday pay at the level of basic pay only (and not including a payment attributable to Flying Time Supplement or TAFB), BA had failed to honour its obligations under reg 4 of the Civil Aviation (Working Time) Regulations 2004, SI 2004/756 (“the Aviation Regulations”), which entitled them to “paid annual leave of at least four weeks” (the Aviation Regulations enforce domestically the UK’s obligations under Council Directive 2000/79/EC of 27 November 2000).

The Employment Tribunal and Employment Appeal Tribunal

Both the Employment Tribunal and the EAT found in favour of the pilots.

The EAT recognised that, in the light of reg 18(2)(b) of the Working Time Regulations, the Employment Rights Act 1996, ss 221-224 that define “a week’s pay” are not directly applicable to civil aviation staff. Nevertheless, the EAT held that the provisions in the 1996 Act represent a convenient and well-recognised method of calculating annual leave pay and should be applied to calculate the pilots’ holiday pay for the purposes of reg 4 of the Aviation Regulations.

In making its decision, the EAT cited the ECJ case of Robinson-Steele v. R.D. Retail Services Ltd [2006] ICR 932 which states that under the Working Time Directive, holiday pay has to be such as to put workers, during leave, in a position as regards remuneration that is comparable to the way they are remunerated when at work.

The Court of Appeal  

The Court of Appeal overturned the decision of the EAT and held that ss 221-224 of the 1996 Act have nothing to do with fixing the level of pilots’ holiday pay and could only serve to fix the level of holiday pay of a worker if they have been expressly adopted and adapted for that purpose. The Court held that while the Working Time Regulations, the Inland Waterways Regulations and the Sea-fishing Regulations did choose to adopt and adapt the sections, the Aviation Regulations purposefully declined to adopt them. Further, reg 18(2)(b) of the Working Time Regulations expressly provides that they have no application to workers to whom the Aviation Regulations apply.

The Court said that if the pay element in “paid annual leave” in reg 4 of the Aviation Regulations had meant to be measured by reference to the pay that a pilot can expect to earn whilst working, the regulations would have explained that required calculation. As it does not, the level of holiday pay under reg 4 is intended to be determined by the pilots’ service agreements.

The Court of Appeal further held that the ECJ’s decision in Robinson-Steele said no more than that “paid annual leave” means pay calculated at the level of “normal” pay, or at a level “comparable” to “normal” pay, with the precise calculation applicable in any case beingexclusively a matter for the determination of the individual member states by “national legislation and/or practice”.

The Supreme Court

In March 2010, the Supreme Court referred 5 questions to the CJEU regarding the nature and assessment of the concept of “paid annual leave” in articles 7 of the Council Directives 93/104/EC and 2003/88/EC and clause 3 of the European Agreement (annexed to and intended to be implemented under Council Directive 200/79/EC).

In September 2011, the CJEU ruled that article 7 of the Council Directives 2003/88/EC and clause 3 of the European Agreement “must be interpreted as meaning that an airline pilot is entitled, during his annual leave, not only to the maintenance of his basic salary, but also, first, to all the components intrinsically linked to the performance of the tasks which he is required to carry out under his contract of employment and in respect of which a monetary amount, included in the calculation of his total remuneration, is provided and, second, to all the elements relating to his personal and professional status as an airline pilot. It is for the national court to assess whether the various components comprising that worker’s total remuneration meet those criteria.” The Court said that such an assessment was to be carried out on the basis of an average over a reference period which was judged to be representative.

The pilots argued that their claims should be remitted to the Employment Tribunal for assessment, and that their remuneration on leave should include basic pay, Flying Time Supplement and 18% of TAFB. BA submitted that the Aviation Regulations were too unspecific to give effect to the Aviation Directive and the requirement for an “average over a reference period which is judged to be representative” required a detailed legislative scheme which could not by supplied by an Employment Tribunal.

In a judgment delivered by Lord Mance, the Supreme Court found in favour of the pilots and unanimously remitted the claims to the Employment Tribunal for further consideration of the appropriate payments to be made.

Comment

In its September 2011 ruling, the CJEU said that components “intended exclusively to cover occasional or ancillary costs arising at the time of performance” need not be taken into account when calculating holiday pay and whether or not TAFB is an element of the pilots’ remuneration or rather an “ancillary cost” was hotly debated. In light of the Supreme Court’s decision, it will now be left to the Employment Tribunal to decide this.

Since the case was issued, thousand of claimants in the civil aviation sector have now made claims for non-payment of various elements of their pay during holidays. But this case is also important for other workers as there will inevitably now be challenges as to the level of pay for annual leave under the Working Time Regulations and the Employment Rights Act 1996.