The calculation of holiday pay
The Supreme Court has issued its decision in the ongoing dispute about the calculation of holiday pay for pilots (British Airways v Williams). Pilots employed by British Airways claim that their holiday pay should include two supplements in addition to their basic pay: a flying pay supplement (paid on a fixed basis at £10 per flying hour) and an allowance payment for time away from base. BA claims that holiday pay should just be made up of basic pay.
The Supreme Court referred the issue to the European Court of Justice, which held that pay during annual leave under the Working Time Directives must include all elements of remuneration. Only payments “intended exclusively to cover occasional or ancillary costs” could be excluded. Elements such as the flying pay supplement therefore had to be paid during holidays.
The Supreme Court has now remitted the case back to the employment tribunal to:
- assess the appropriate payments to be made in relation to the flying pay supplement (by using an average over a representative reference period); and
- decide whether the time away from base payments were intended exclusively to cover expenses or were part of pilots’ remuneration.
The case concerned pilots and the Aviation Directive but it is relevant to all workers because the ECJ expressly stated that the principles applied to the Working Time Directive as well as the Aviation Directive. This may lead to employees challenging the calculation of holiday pay (particularly those in the public sector who can rely directly on the Directive). Employees might argue that certain commission and overtime payments which are not included in the definition of holiday pay under the Working Time Regulations should fall into the category of “normal remuneration whilst working” as articulated by the ECJ.
It will be interesting to see what the Employment Tribunal’s take on this is when the remitted case is heard. It is suspected that this is not the end of the chapter for working time and holiday pay in the aviation industry!
The volume of these claims has created a bit of a headache for the administrative departments of the Employment Tribunals, as due to rules on time bar for working time claims, the pilots have needed to submit new claims within 3 months of every occasion when payment for holidays has been due.