Representative pay

Airline pilots are entitled by law to statutory, paid annual leave, but the Civil Aviation (Working Time) Regulations 2004 do not make clear how the pay should be calculated. In British Airways v Williams and ors, the Supreme Court held that employment tribunals must construe the Regulations in accordance with European law to ensure that pilots are paid their normal remuneration during statutory annual leave.

The claimants’ union, BALPA, instructed Thompsons to act on behalf of their 2,750 members.

Basic facts

BA paid its pilots a basic salary plus a “flying time” supplement (FPS) and an allowance for any time spent away from their base airport (TAFB). Their holiday leave was, however, paid at the level of basic pay and did not include an amount in respect of the additional allowances.

The pilots claimed that BA was in breach of Regulation 4 of the Civil Aviation (Working Time) Regulations, entitling them to “paid annual leave of at least four weeks”. Regulation 4 did not, unlike the Working Time Regulations 1998, 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.

Previous decisions

Although the tribunal and the EAT agreed with the pilots, the Court of Appeal disagreed. The Supreme Court then asked the Court of Justice of the European Union (CJEU) to decide whether paid annual leave meant the same under the UK Working Time Directive as it did for pilots under the European Aviation Agreement.

It held (weekly LELR 238) that pay when on leave must include all elements of remuneration, if necessary calculated on the basis of an average over a representative period. Only payments "intended exclusively to cover occasional or ancillary costs" could be excluded and elements such as FPS had to be paid for periods of holidays.

The case was then remitted back to the Supreme Court to decide how the decision applied to the pilots’ claims.

Decision of Supreme Court

The Supreme Court held that employment tribunals could assess what the pilots should have been paid in respect of FPS during annual leave by using “an average over a reference period which is judged to be representative”.

Based on the reasoning of the CJEU, the Supreme Court said that indicated the payment should be worked out using an average which was representative of “normal” working and remuneration, rather than a calculation based on what the employee might have earned during the holiday period.

Although words like “representative” and “normal” involved exercising some judgment, the Court said that national courts were capable of doing that. In order to ascertain what might constitute a “representative period”, it said that BA should choose the parameters in the first instance, but if they failed to do so, they couldn’t then complain if a court or tribunal took the decision when an individual employee brought a case.

Even though the regulations did not expressly address complaints relating to the payment of annual leave, the Supreme Court said that they gave individuals the right to complain to a court if an employer refused to allow them to exercise any of their rights and they also allowed tribunals to award compensation.

In the Court’s view, this could include compensation for a refusal to pay holiday pay and concluded that the claims should be remitted to the tribunal to consider the appropriate payments that BA should make. It also remitted the question about whether TAFB payments were intended exclusively to cover expenses or were part of the pilots' remuneration.