* United Kingdom, Supreme Court of the United Kingdom, 17 October 2012 UKSC 2009/0042

Identification of the case

• Fair and just working conditions (art. 31 CFREU)

• Reg. 4, 9 and 18 of the Civil Aviation (Working Time) Regulations 2004
• Working Time Regulations 1998
• Sections 221 and 224 of Employment Rights Act 1996
• Reg. 12 of Merchant Shipping (Hours of Work) Regulations 2002

• Art. 7 of Council Directive 93/104/EC
• Working Time Directive 2003/88/EC
• Clause 3 of the European Agreement on the Organisation of Working Time of Mobile Workers in Civil Aviation annexed to Council Directive 2000/79/EC

Summary of the case

The salary earned by pilots working for British Airways comprised of three parts; (i) basic pay, (ii) flying time of £10 per hour and (iii) time spent away from base of £2.73 per hour. When taking their annual leave these pilots were only paid a ‘basic pay’, neglecting to calculate the other two forms of payment in their ‘annual paid leave’. The pilots believed this was not fair, that all three payments were owed to them, and that only giving a basic pay was in breach of Regulation 4 of the Working Time Regulations. This legislation guaranteed ‘paid annual leave’, though it was unclear as to exactly what this meant. The key question of this case was whether British Airways was bound to award its pilots an annual leave representative of all three payments, or if a ‘basic pay’ was sufficient following EU law.

• Civil judicial enforcement

(1) Under (a) articles 7 of Council Directives 93/104/EC and 2003/88/EC and (b) clause 3 of the European Agreement annexed to the Council Directive 2000/79/EC: (i) to what, if any, extent does European law define or lay down any requirements as to the nature and/or level of the payments required to be made in respect of periods of paid annual leave; and (ii) to what, if any, extent may member states determine how such payments are to be calculated?

(2) In particular, is it sufficient that, under national law and/or practice and/or under the collective agreements and/or contractual arrangements negotiated between employers and workers, the payment made enables and encourages the worker to take and to enjoy, in the fullest sense of these words, his or her annual leave; and does not involve any sensible risk that the worker will not do so?

(3) Or is it required that the pay should either (a) correspond precisely with or (b) be broadly comparable to the worker's "normal" pay? Further, in the event of an affirmative answer to question (3)(a) or (b):

(4) Is the relevant measure or comparison: (a) pay that the worker would have earned during the particular leave period if he or she had been working, instead of on leave, or (b) pay which he or she was earning during some other, and if so what, period when he or she was working?

(5) How should "normal" or "comparable" pay be assessed in circumstances where: (a) a worker's remuneration while working is supplemented if and to the extent that he or she engages in a particular activity; (b) where there is an annual or other limit on the extent to which, or time during which, the worker may engage in that activity, and that limit has been already exceeded or almost exceeded at the time(s) when annual leave is taken, so that the worker would not in fact have been permitted to engage in that activity had he been working, instead of on leave?

The Court of Justice of the European Union, after a request by the Supreme Court for a preliminary ruling, ruled that ‘paid annual leave’ related to any aspect of the job which was intrinsically linked to the performance of the tasks required of the worker. This seems to mean flying time but not time spent away from base.

British Airways however, maintained its original position that ‘paid annual leave’ should only include ‘basic pay’. Nonetheless, without any new concrete arguments, their claims were dismissed by the Supreme Court and the case was referred back to the Employment Tribunal to deliver a final ruling. The Employment Tribunal was then tasked with deciding the appropriate payments for the pilots, based on the preliminary ruling definitions presented by the Court of Justice.

British Airways had also argued that the concept of paid annual leave should be understood in the context of the relevant directives, which aim to promote the health and safety of workers (relying on the CJEU’s judgment in United Kingdom v Council of the European Union (Case C-84/94)), and that the current situation did not concern one of health. The referring court made note of the case of R(BECTU) v Secretary of State for Trade and Industry (Case C-173/99), in which the Court of Justice ‘stressed the importance of “the general principles of protection of the health and safety of workers” and the aim of “ensuring effective protection of … health and safety” (paragraphs 40 and 44)’ when it held a provision of the then Working Time Regulations, which which did not give rise to an entitlement to paid annual leave until an employee had been continuously employed for 13 weeks, to be impermissible. Paid leave was a ‘particularly important principle’ from which no derogation was allowed, and the Directive did not allow Member States to add preconditions or exclude the right to all workers. British Airways had argued that paid annual leave should be given at a level that ensures it can be taken and enjoyed, i.e. payment that avoids frustrating or undermining the purpose of the directives. The referring court agreed with them that the current situation for British Airways pilots could not be considered to pose a risk to their health or safety (on the basis that the rules would discourage pilots from taking annual leave) and that the pilots concerned did in practice take the voluntary annual leave to which they were entitled. This point was not discussed substantively by the CJEU in its preliminary ruling.

To summarise the decision of the Court of Justice, ‘paid annual leave’ should consist of ‘normal remuneration’ which must be ‘comparable to periods of work’. This means any aspect of work which is intrinsically linked to the job must be considered when calculating annual leave payments. The exact meaning of this phrase, in the context of British Airways pilots, was to be decided by the Employment Tribunal.

The preliminary ruling was implemented in this follow-up case by the Supreme Court. More precisely, the Supreme Court concluded that, in accordance with the Court of Justice’s preliminary ruling, a ‘paid annual leave’ should not include just a pilot’s basic salary but other criteria should be taken into consideration for the remuneration such as his professional and personal status as a pilot. On this basis, the Supreme Court remitted the case to the Employment Tribunal.

Role of the Charter and role of the general principles on enforcement

Article 31(2) CFREU (Fair and Just Working Conditions) is related to this case. According to this case, the given ‘paid annual leave’ to pilots of British Airways violated the right to an annual period of paid leave.

Art. 18(1) and (4)(a) of the Civil Aviation (Working Time) Regulations 2004: 18 -(1) A crew member may present a complaint to an employment tribunal that his employer has refused to permit him to exercise any right he has under regulation 4, 5(1), (4), 7(1) or 7(2)(b). -(4) The amount of the compensation shall be such as the tribunal considers just and equitable in all the circumstances having regard to— (a) the employer's default in refusing to permit the crew member to exercise his right.

As the Supreme Court concluded, the concept of refusal to permit the exercise of a right could extend to cover refusal to permit the crew member an appropriate payment as of the right to paid annual leave. Thus, the Employment Tribunal could make an award as it considered just and equitable to compensate for such refusal.

According to the appellants, the right to paid annual leave, as enshrined in Art. 31(2) CFREU, was violated by the respondent as components related to professional and personal status were not considered in respect of their paid annual leave. Consequently, they instituted legal proceedings to receive an annual paid leave in accordance with the EU law standards. Therefore, the right to an effective remedy is also relevant to this case.

Elements of judicial dialogue

• Direct dialogue between CJEU and National court (preliminary reference)

• C-282/10, Maribel Dominguez v Centre informatique du Centre Ouest Atlantique and Préfet de la région Centre
• C-186/89, Marleasing SA v La Comercial Internacional de Alimentacion SA
• C-155/10, Williams and Others v British Airways plc
• Joined Cases C-397-403/01, Bernhard Pfeiffer (C-397/01), Wilhelm Roith (C-398/01), Albert Süß (C-399/01), Michael Winter (C-400/01), Klaus Nestvogel (C-401/01), Roswitha Zeller (C-402/01) and Matthias Döbele (C-403/01) v Deutsches Rotes Kreuz, Kreisverban

Preliminary reference.

The purpose of the judicial dialogue was to define the nature and to assess the concept of ‘annual paid leave’ as depicted in Article 7 of Directive 93/104/EC and the Aviation Directive 2000/79/EC.

The outcome was the clarification of the concept of ‘annual paid leave’ by the Court of Justice in order for the case to proceed at the domestic level.

Additional notes on the decision

Since this case was issued, there have been many claimants in the civil aviation sector claiming non-payment of various elements of their annual paid leave. In addition, this case was also important for workers in general regarding the level of pay for annual leave under the Working Times Regulations 1998.