British Airways PLC v. Williams & Ors [2012] UKSC 43.
The Supreme Court ruled on 17
October 2012 that employment tribunals have jurisdiction under the Aviation
Directive 2000/79/EC, implemented by Regulation 18 of the Civil Aviation (Works
Time) Regulation 2004 to hear complaints regarding the calculation of pilots’
paid annual leave. The question brought
before the Court by Williams and others, was whether the requirement of paid
annual leave in accordance with Regulation 4 should include other monetary
components received under their contracts of employment; at the time BA pilots
were only receiving their basic rate of pay.
The appellant pilots put forward
arguments that their paid annual leave should be fixed at a comparable rate to
the amount received whilst working. It should include flying pay supplements
(FPS) and time away from base payments (TAFB).
Before making its decision, the Supreme Court submitted a reference to
the Court of Justice of the European Union (CJEU) seeking clarification on the
definition of “paid annual leave”.
The CJEU held in September 2011 that
paid annual leave was to include supplementary payments that were intrinsically
linked to the performance of tasks they are required to carry out under their
contracts of employment. The European Court held that such payments did not
include those that were “intended exclusively to cover occasional or ancillary
costs arising at the time of performance”. Moreover, it ruled that the
assessment of paid annual leave should be done by national courts. In carrying
out such assessments, national courts were required to use “an average over a
reference period which is judged to be representative”.
Following the reference, the appellants
asserted that the current Regulations were not specific enough for employment tribunals
to determine such a reference period. This was unanimously rejected by the
Supreme Court. Lord Mance (with whom
Lord Hope, Lord Walk, Lord Clarke and Lord Sumption agreed) held there would
indeed be some exercise of judgment required in determining a reference period.
However, this was within the capacity of employment tribunals.
In remitting the case to the employment tribunal,
Lord Mance held that the similarity in language of both the Regulations and the
Directive meant the principles the CJEU had laid down regarding the Directive
governed the domestic Regulations.
In response to the appellant’s
submissions that TAFB payments should be included in assessing paid annual
leave, the respondent contend that the payments were intended exclusively to
cover pilot’s costs and therefore should be excluded in its entirety from the
above calculations. The Court however held that it had insufficient materials
to determine the real basis of TAFB payments, and therefore this was also to be
considered by the employment tribunals. In offering guidance on the matter, the
Court held the tribunal did not need to conduct a detailed evaluation on the
need for, or reasonableness of the TAFB payments; rather it was to focus on
whether such payments were paid with the intention of exclusively covering
costs.
Read the judgment here