British Airways Plc v Williams & Ors

Regulation 4 of the Civil Aviation (Working Time) Regulations 2004 requires annual leave to be paid, but does not prescribe a measurable minimum level or formula for holiday pay. Community law requires normal or comparable remuneration, while leaving the precise method of calculation to national legislation or practice. Sections 221 to 224 of the Employment Rights Act 1996 cannot be imported into the aviation scheme when the relevant regulations expressly exclude them and the aviation regulations omit them. An employment tribunal cannot devise a replacement formula. Unpaid or merely token leave may nevertheless defeat the statutory purpose.

British Airways appealed against a decision of the Employment Appeal Tribunal, which had upheld an Employment Tribunal decision concerning holiday pay for approximately 2,750 pilots. The pilots received basic salary during leave but claimed that their flying-time supplement and taxable time-away-from-base allowance should also be included.

The Employment Tribunal held that holiday pay should be calculated by reference to sections 221 to 224 of the Employment Rights Act 1996. The Employment Appeal Tribunal upheld that conclusion; its decision is reported at [2008] ICR 779. The central issue was whether regulation 4 of the Civil Aviation (Working Time) Regulations 2004 required a higher level of pay, and whether a tribunal could determine a formula where the regulations supplied none.

Lord Justice Rimer gave the leading judgment. Lord Justice Lloyd and Lord Justice Ward agreed.

1. Disposition. BA’s appeal was allowed, the pilots’ cross-appeal was dismissed, the decisions below were set aside and the pilots’ claims were dismissed.
2. Domestic construction. Regulation 4 of the Civil Aviation (Working Time) Regulations 2004 did not ordinarily require holiday pay to be calculated by reference to remuneration earned while working. If that had been intended, the legislation would have specified a calculation method. The omission of sections 221 to 224 of the Employment Rights Act 1996 was deliberate, particularly because regulation 18(2)(b) of the Working Time Regulations 1998 excluded those provisions for workers covered by the aviation scheme.
3. Community law. Robinson-Steele v R.D. Retail Services Ltd [2006] ICR 932 and Stringer v HM Revenue and Customs [2009] IRLR 214 established the broad principle that paid annual leave involves normal or comparable remuneration. That principle did not prescribe one Community-wide calculation. As explained in Bamsey v Albon Engineering & Manufacturing plc [2004] IRLR 457, member states retained a margin to determine the method through national legislation or practice.
4. No judicially created formula. No national legislation or practice fixed the pilots’ claimed entitlement. Sections 221 to 224 served other purposes under the Employment Rights Act 1996 and could not fill the omission. An employment tribunal had no residual power to fashion its own mechanism.
5. Remedy and qualification. Regulation 18 was not drafted for claims that an agreed level of holiday pay was too low. However, unpaid leave or leave paid at only a token or derisory amount could breach regulation 4 because the statutory purpose is to enable the worker to take the leave. The possible implications of any partial failure of implementation, including a claim against the United Kingdom, were left undecided.

• Court of Appeal (Civil Division): Allowed BA’s appeal, dismissed the pilots’ cross-appeal, set aside the decisions below and dismissed the claims.
• Employment Appeal Tribunal: Upheld the Employment Tribunal’s decision; the judgment is reported at [2008] ICR 779.
• Employment Tribunal: Held that the pilots’ holiday pay should be calculated by reference to sections 221 to 224 of the Employment Rights Act 1996.