On 24 February 2010, this two day hearing will begin. The dispute relates to the level of holiday pay to which Ms Williams and some 2,750 other petitioners who are airline pilots for British Airways plc are entitled.

Currently, the Pilots’ service agreements provide that they are remunerated under a salary structure which entitles them to (i) basic pay; (ii) a “flying time” supplement of £10 per flying hour; and (iii) an allowance of £2.73 per hour of time spent away from their base airport (“TAFB”). They are also entitled to holiday and their service agreements provide that the pay they receive for that holiday is fixed at the level of their basic pay.

The Pilots brought claims before the Employment Tribunal for compensation from BA on the basis that the company has underpaid them in respect of holiday pay. They claim that in paying them holiday pay at the level of basic pay only, BA has failed to honour its obligations under regulation 4 of the Civil Aviation (Working Time) Regulations 2004 (SI 2004/756) (“the Aviation Regulations”) which entitles them to “paid annual leave of at least four weeks”. The pilots say that their holiday pay should be fixed at a level equivalent, or comparable, to that of the pay they receive when working and so should include, in addition to basic rate pay, an element of pay attributable to the flying time supplement and the taxable part of the TAFB allowance. For Ms Williams, this would increase her holiday pay by approximately 10%.

The Employment Tribunal found in favour of the Pilots. BA appealed to the Employment Appeal Tribunal, who dismissed the appeal.

The EAT recognised that, in the light of Regulation 18(2)(b) of the Working Time Regulations (as amended), sections 221 to 224 of the Employment Rights Act 1996 (the “ERA”) which define “a week’s pay” are not directly applicable to civil aviation staff.  Nevertheless, the the EAT held that the ERA provisions should be applied to calculate the Pilots’ holiday pay for the purposes of Regulation 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 EAT held that despite Regulation 18(2)(b) of the Working Time Regulations, sections 221 to 224 of the ERA represent a convenient and well-recognised method of calculating annual leave pay in a way which does not infringe the principle of Community law as set out in Robinson-Steele and so should be applied in this case.  

BA then successfully appealed to the Court of Appeal.  A unanimous court held that sections 221 to 224 of the ERA have nothing to do with fixing the level of pilots’ holiday pay and can 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 said 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, Regulation 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 Regulation 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 Regulation 4 is intended to be determined by the Pilots’ service agreements (the industry being a unionised one in which it could be and was presumed that such a matter would be covered by collective agreements).

The Court of Appeal further held that the ECJ’s decision in Robinson-Steele says 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 decision does no more than to state a broad, general principle and while member states must have regard to the principles of “normality” and “comparability”, they enjoy a margin of appreciation as to how they do so.

Ms Williams and others challenge this decision and Lord Walker, Lord Hale, Lord Brown, Lord Mance and Lord Clarke will hear the appeal next week.

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