Pie in the sky

British Airways v Williams

Most UK workers are entitled to statutory, paid annual leave, but how should that pay be calculated? In British Airways v Williams, the Court of Appeal said that it was up to member states to decide. As the UK had made clear that the provisions in the 1996 Employment Rights Act for calculating a week’s pay did not apply to the aviation industry, airline pilots could not rely on them to argue that their holiday pay should include flying time allowances.

The claimants’ union, BALPA, instructed Thompsons to act on their behalf.

Basic facts

BA paid its pilots a basic salary plus a “flying time” supplement and an allowance for any time spent away from their base airport, as well as annual leave under their service agreements. This contractual holiday leave was paid at the level of basic pay, on the basis that if they weren’t flying and not away from their home base, they were not entitled to the additional allowances.

The pilots claimed that BA was in breach of regulation 4 of the Civil Aviation (Working Time) Regulations 2004 which came into force on 13 April 2004, entitling them to “paid annual leave of at least four weeks”. The regulation did not, however, stipulate how the pay was to be calculated. The pilots argued that their holiday pay for this statutory period should include the additional supplement and allowance.

Tribunal and EAT decisions

And the tribunal agreed. At a preliminary hearing it said that “paid annual leave” in regulation 4 of the Aviation Regulations meant “an amount comparable to the contractual pay received when working”. BA should therefore have relied on sections 221 to 224 of the ERA when calculating the pilots’ holiday pay, by averaging their earnings over the preceding 12 weeks.

And the EAT agreed. Relying on the decision of the European Court of Justice in Robinson-Steele v RD Retail Services Ltd, it said that holiday pay had to be comparable to the pay that workers got when they were actually at work. That meant that BA’s pilots had to receive holiday pay which included the allowances and supplements to which they were entitled when working, as well as their basic rate salary. It concluded that sections 221 – 224 of the ERA could be used for calculating their holiday pay.

Court of Appeal decision

The Court of Appeal, however, disagreed. It said that the ordinary meaning of the pay element in “paid annual leave” within regulation 4 of the 2004 Regulations was not “pay measured in some way by reference to the pay that a pilot can expect to earn whilst working”.

Nor were sections 221 to 224 of the 1996 Act impliedly incorporated into regulation 4. That meant that regulation 4 could not be used to argue that the pay element of “paid annual leave” had to be calculated by reference to pay earned by the pilots when working.

And although the decisions of the ECJ in Robinson-Steele and Stringer v HM Revenue and Customs showed that “paid annual leave” was pay that was comparable to pay earned during periods of work, the Court had just been laying down a broad, general principle as to how it should be calculated. It was not trying to stipulate how the principle should work in practice as that was for member states to decide by “national legislation and/or practice”.

On that basis, the pilots’ case could not be sustained “because no national legislation or practice has determined the level of their holiday pay. There is thus no logical basis on which the pilots can demonstrate a breach of the statutory obligation imposed by regulation 4”.

It concluded that sections 221 to 224 had nothing to do with fixing the pilots’ holiday pay and could only do so if they had “been expressly adopted and adapted for that purpose”. As the working time regulations expressly stated that the provisions in the ERA did not apply to the aviation industry, they could not be relied on in this case.