JUDGMENT
British Airways plc (Respondents) v Williams
(Appellant) and others
before
Lord Hope, Deputy President
Lord Walker
Lord Mance
Lord Clarke
Lord Sumption
JUDGMENT GIVEN ON
17 October 2012
Heard on 23 July 2012
Appellant Respondent
Jane McNeill QC Christopher Jeans QC
Michael Ford Andrew Short QC
(Instructed by Thompsons
Solicitors)
(Instructed by Baker and
Mackenzie LLP)
LORD MANCE (with whom Lord Hope, Lord Walker, Lord Clarke and Lord
Sumption agree)
Introduction
1. By its judgment in this appeal dated 24 March 2010 the Supreme Court referred
to the Court of Justice five questions regarding the nature and assessment of the
concept of “paid annual leave” in articles 7 of Council Directives 93/104/EC and
2003/88/EC and clause 3 of the European Agreement annexed to and intended to be
implemented under Council Directive 2000/79/EC (“the Aviation Directive”). The
Court of Justice by its judgment dated 15 September 2011 gave its response: British
Airways plc v Williams (Case C-155/10) [2012] ICR 847. The parties are now at odds
as to its consequences for the dispute between them.
2. Clause 3 of the European Agreement reads:
“(1) Mobile staff in civil aviation are entitled to paid annual leave of at
least four weeks, in accordance with the conditions for entitlement to,
and granting of, such leave laid down by national legislation and/or
practice.
(2) The minimum period of paid annual leave may not be replaced by an
allowance in lieu, except where the employment relationship is
terminated.”
3. In the United Kingdom, The Civil Aviation (Working Time) Regulations 2004
(SI 2004/756) (“the Aviation Regulations”) were introduced to comply with this
country’s obligations to give effect to Directive 2000/79/EC. The Aviation
Regulations provide:
“4. (1) A crew member is entitled to paid annual leave of at least four
weeks, or a proportion of four weeks in respect of a period of
employment of less than one year.
(2) Leave to which a crew member is entitled under this regulation-
(a) may be taken in instalments;
(b) may not be replaced by a payment in lieu, except where the crew
member’s employment is terminated.”
4. As the Supreme Court explained in its judgment dated 24 March 2010 the
Aviation Regulations are part of a wider complex of legislation requiring paid annual
leave, starting with a general requirement introduced by Directive 93/104/EC (“the
Working Time Directive”). The Working Time Directive excluded various sectors,
including air transport. Further, when the Working Time Directive was implemented
by the Working Time Regulations 1998 (SI 1998/1833) (“the Working Time
Regulations”), these made specific reference to sections 221 to 224 (and by
implication sections 234 to 235) of the Employment Rights Act 1996, which contain a
detailed scheme (originally introduced in the context of redundancy pay) for
ascertaining a week’s pay in the cases of employments with and without “normal
working hours”. In contrast, the Aviation Regulations neither contain nor refer to any
such scheme. They leave the concept of “paid annual leave” undefined. Hence, the
issues arising in this appeal.
5. The appellants are British Airways pilots. Their terms of employment,
negotiated by their union, British Air Line Pilots Association (“BALPA”), are found
in a Memorandum of Agreement (“MOA”) which requires them to take 30 days’
annual leave and entitles them to take a further two weeks’ leave, save in the case of
pilots with a Gatwick base, who are obliged to take 35 days’ holiday and are entitled
to a further seven days of leave. The MOA provides for pilots to receive (a) a fixed
annual sum, plus two supplementary payments varying according to the time spent
flying, consisting of (b) the Flying Pay Supplement (“FPS”) paid at £10 per flying
hour and (c) the Time Away from Base allowance (“TAFB”) paid at £2.73 per hour.
British Airways explains that TAFB was “introduced to replace meal allowances,
sundries and the Gatwick Duty Allowance” and to be “increased in accordance with
the UK Retail Prices Index for Catering – Restaurant Meals”. Her Majesty’s Revenue
and Customs’ attitude is that the TAFB is over-generous and that 18% of it is taxable,
in effect as pure remuneration.
The history of the case to date
6. When the appeal first came before the Supreme Court, British Airways’
primary submission was that the United Kingdom legislator, by omitting to introduce
any detailed scheme for the calculation of “paid annual leave” like that provided under
the Working Time Regulations, must be taken to have left this to be determined by
collective or individual agreement between the parties, whatever might be the effect of
the Aviation Directive. The Supreme Court was not at that time persuaded by this
submission, and thought it likely to be possible to construe the Aviation Regulations
to reflect what meaning the Aviation Directive might have. Hence, the reference made
to the Court of Justice.
7. British Airways’ second submission was that the Aviation Directive was to like
effect, leaving the calculation of “paid annual leave” to collective or individual
agreement between the parties. Its third submission, if this was wrong, was that the
only constraint imposed by the Directive was that pay during annual leave must not be
so low as to prevent or inhibit the taking of leave. Finally, it submitted that the fixed
annual sum – (a) above – constituted the pilots’ normal pay and was sufficiently
comparable to remuneration received while working to satisfy the requirement for
paid annual leave.
8. The questions referred to the Court of Justice by the Supreme Court were in
these circumstances:
“(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?
9. The Court of Justice gave a compendious answer. It ruled (para 31) that article
7 of Directive 2003/88/EC and clause 3 of the European Agreement:
“must be interpreted as meaning that an airline pilot is entitled, during
his annual leave, not only to the maintenance of his basic salary, but
also, first, to all the components intrinsically linked to the performance
of the tasks which he is required to carry out under his contract of
employment and in respect of which a monetary amount, included in the
calculation of his total remuneration, is provided and, second, to all the
elements relating to his personal and professional status as an airline
pilot. It is for the national court to assess whether the various
components comprising that worker’s total remuneration meet those
criteria.”
10. The Court of Justice’s reasoning makes clear that it was ruling against British
Airways on questions (2), (3) and (5)(a):
“20 The purpose of the requirement of payment for that leave is to put
the worker, during such leave, in a position which is, as regards
remuneration, comparable to periods of work …
21 … remuneration paid in respect of annual leave must, in principle, be
determined in such a way as to correspond to the normal remuneration
received by the worker. It also follows that an allowance, the amount of
which is just sufficient to ensure that there is no serious risk that the
worker will not take his leave, will not satisfy the requirements of
European Union law.”
11. The court went on, in further answer, to say that where, as here, pay was
structured to involve several components, “a specific analysis” was required (para 22),
because (para 23):
“that structure cannot affect the worker’s right … to enjoy, during his
period of rest and relaxation, economic conditions which are comparable
to those relating to the exercise of his employment”
and
“24 Accordingly, any inconvenient aspect [sic] which is linked
intrinsically to the performance of the tasks which the worker is required
to carry out under his contract of employment and in respect of which a
monetary amount is provided which is included in the calculation of the
worker’s total remuneration, such as, in the case of airline pilots, the
time spent flying, must necessarily be taken into account for the
purposes of the amount to which the worker is entitled during his annual
leave.
25 By contrast, the components of the worker’s total remuneration which
are intended exclusively to cover occasional or ancillary costs arising at
the time of performance of the tasks which the worker is required to
carry out under his contract of employment, such as costs connected
with the time that pilots have to spend away from base, need not be
taken into account in the calculation of the payment to be made during
annual leave.
26 In that regard, it is for the national court to assess the intrinsic link
between the various components which make up the total remuneration
of the worker and the performance of the tasks which he is required to
carry out under his contract of employment. That assessment must be
carried out on the basis of an average over a reference period which is
judged to be representative and in the light of the principle established
by the case law …, according to which Directive 2003/88 treats
entitlement to annual leave and to a payment on that account as being
two aspects of a single right…
27 That stated, it must also be pointed out that the court has already held
that an employee, working as a purser for an airline company and
transferred, by reason of her pregnancy, temporarily to ground work,
was entitled, during her temporary transfer, not only to maintenance of
her basic salary but also to pay components or supplementary
allowances relating to her professional status as an employee.
Accordingly, allowances relating to her seniority, her length of service
and her professional qualifications had to be maintained: see, to that
effect, Parviainen v Finnair Oyj (Case C-471/08) [2011] ICR 99;
[2010] ECR I-6529, para 73. That case law also applies to a pregnant
worker who has been granted leave from work: see Gassmayr v
Bundesminister für Wissenschaft und Forschung (Case C-194/08)
[2010] ECR I-6281, para 65.
28 It follows that, in addition to the components of the total
remuneration set out in para 24 of the present judgment, all those which
relate to the personal and professional status of an airline pilot must be
maintained during that worker’s paid annual leave.”
12. The court ended its reasoning by repeating that “It is for the national court to
assess whether the various components comprising that worker’s total remuneration
meet those criteria” (para 31). The court therefore drew a distinction relevant to TAFB
between, on the one hand, remuneration, including remuneration based on personal or
professional status, for all activities whether basic or “inconvenient” undertaken
during employment (para 24) and, on the other hand, payments “intended exclusively
to cover occasional or ancillary costs” (para 25) – costs which would not of course be
incurred during holiday periods.
13. The court made clear in para 26 that it is “for the national court to assess” into
which of the two categories identified in paras 24 and 25 any payment fell. When it
went on in para 26 to state that “That assessment must be carried out on the basis of an
average over a reference period which is judged to be representative”, the most natural
reading of the statement is that the court understood that this assessment was also
something that the national court could and would judge for itself. The court’s
reasoning in para 26 further indicates that it contemplated an average over a reference
period judged to be representative of “normal” working and remuneration, rather,
therefore, than a calculation based on what the employee might have earned during the
holiday period, had she or he then been working.
14. The concept of “a reference period … judged to be representative” recognises
the exercise of judgment inherent in words like “representative” and “normal”. The
Court of Justice was not prescriptive as to what might or might not constitute a
representative period. The court did not expressly address the question how far a
member state or national court might adopt a standard period, applicable to a range of
employees, like that required under sections 221 to 226 of the Employment Rights Act
1996. Different British Airways pilots may earn different supplementary amounts of
FPS (or TAFB) according to their different flying patterns during different periods.
This could no doubt be one factor to bear in mind in arriving at any reference period,
whether for pilots generally or for a particular pilot. Further, the court did not
specifically answer question (5)(b), which is potentially relevant since Regulation 9 of
the Aviation regulations provides:
“in any month
(a) no person … shall act as a crew member during the course of his
working time, if during the period of 12 months expiring at the end of
month before the month in question the aggregate block flying time of
that person exceeds 900 hours; and (b) no crew member employed by
him shall have a total annual working time of more than 2,000 hours
during the period of 12 months expiring at the end of the month before
the month in question”.
If a reference period of the previous 10 or 11 months at work were taken, a pilot might
in that period have exhausted his or her permitted 900 hours. If an average is in such
circumstances to be calculated including all 900 hours, the pilot would (as he or she
arguably should) receive paid holiday pay higher than that receivable by a pilot who
had only flown 800 hours in the same 10 or 11 months.
The current issues
15. In the light of the Court of Justice’s judgment, the appellants submit that (i)
each of their claims can and should now be remitted to the Employment Tribunal for
assessment by that tribunal of a representative period and of the relevant remuneration
earned during that period, and that (ii) such remuneration should include not merely
basic pay and FPS, but also 18% of TAFB. British Airways, on the other hand,
submits that (i) the Aviation Regulations are too unspecific to give effect to the
Aviation Directive, in the absence of any relevant legislative scheme, and (ii) that the
whole of the TAFB should be excluded from remuneration for the purposes of any
calculation.
16. It is common ground that clause 3 of the European Agreement annexed to the
Aviation Directive does not have direct effect against British Airways. In Dominguez
v Centre Informatique du Centre Ouest Atlantique (Case C-282/19) [2012] ICR D23,
the Court of Justice treated the equivalently worded article 7 of the Working Time
Directive as directly effective against the State. But British Airways is not an
emanation of the State. Clause 3 of the European Agreement can only therefore be
invoked against British Airways if it has been effectively implemented at domestic
level. In support of its first, general submission, British Airways thus argues that this
has not occurred; that the concept of “an average over a reference period which is
judged to be representative” is open-ended and so open to differing assessments that
implementation of the Aviation Directive in national law requires legislation; and that
the mere echoing in regulation 4(1) of the phrase “paid annual leave” which appears in
clause 3 is insufficient for effective implementation of the Directive.
17. At the European legal level, British Airways invokes the principle of legal
certainty; at the domestic level, it submits that no possibility exists of “interpreting”
the Aviation Regulations as implementing the Aviation Directive effectively, pursuant
to the well-established duty to interpret domestic legislation so far as possible in a
manner conforming with any obligations imposed by a Directive: see, inter alia,
Marleasing SA v La Comercial Internacional de Alimentación SA (Case C106/89)[1990] ECR I-4135 and Pfeiffer v Deutsches Rotes Kreuz, Kreisverband
Waldshut eV (Joined Cases C-397-403/01) [2005] ICR 1307, paras 109-120. The
impossibility of a conforming interpretation is reinforced, British Airways submits, by
the consideration that the Merchant Shipping (Hours of Work) Regulations 2002 (SI
2002/2125), although not directly in issue, provide (in regulation 12) for the same
entitlement to paid annual leave, but go on to provide not for civil liability, but for
criminal liability in the event of any contravention of regulation 12. British Airways
argue that the need for legal certainty and the obstacles to any form of interpretive
solution are all the greater when the concept of “paid annual leave” has, albeit in the
context of other Regulations, penal implications. British Airways invokes in this
connection the principle that the interpretive obligation recognised in cases such as
Marleasing should not be used with the effect of “determining or aggravating”
domestic criminal liability: Criminal Proceedings against Kolpinghuis Nijmegen BV
(Case 80/86) [1987] ECR 3969, para 14 and Criminal Proceedings against Arcaro
(Case C-168/95) [1997] All ER (EC) 82, para 42.
18. British Airways notes that the present situation has only arisen because pilots
have been successful in the Court of Justice in challenging the parties’ collective
agreement in the MOA, according to which basic pay was to be taken as the measure
of paid annual leave and increments in basic pay were from time to time negotiated.
Had the Court of Justice restricted the payment required during annual leave to basic
pay or allowed the parties to do so, there would have been no problem in knowing
what the Directive required or in giving effect to it at national level. As it is, however,
British Airways submits, the requirements of the Directive, as explained by the court,
require a detailed legislative scheme, which is not found in the Aviation Regulations
and could not be supplied by an employment tribunal.
19. Finally, British Airways seeks to gain support for its case from the absence in
regulation 18 of the Aviation Regulations of any explicit power in the employment
tribunal to assess or award compensation for paid annual leave. That, British Airways
submits, is precisely because no one conceived that paid annual leave could, under the
Aviation Regulations, mean anything other than basic pay, as had been collectively
agreed by the MOA. Now that it is clear that it means more, the absence of any such
power confirms the absence of any legislative scheme regarding paid annual leave
sufficient to implement the Aviation Directive or to have any domestic effect.
Analysis on issue of uncertainty and domestic effect
20. I do not accept British Airways’ submissions. Their foundation is the openendedness of the exercise of judgment inherent in the concept of “an average over a
reference period which is judged to be representative”. The domestic legislator may
well have assumed, as British Airways submits, that the assessment of paid annual
leave would be a simple matter, with any problems being resolved by collective
agreement. The more sophisticated assessment now revealed to be necessary and the
absence of any collective agreement leave scope for differences of view about the
period to be taken. On the other hand, a general legislative scheme of the sort that
British Airways maintains to be required could itself have risked being overprescriptive. Be that as it may, the legislator chose in the Aviation Regulations simply
to repeat the relevant language of the Aviation Directive. The Court of Justice having
explained the principles behind article 7 of the Working Time Directive and clause 3
of the European Agreement, the same principles must be taken to have been intended
to govern the same wording where it appears in regulation 4 of the Aviation
Regulations.
21. The solution, in my opinion, is that, in these circumstances and in the absence
of any other means of ascertaining a representative reference period, the choice of a
reference period is in the first instance for British Airways to make. This is a choice
to be made by British Airways within the parameters of what can (reasonably) be
“judged to be representative”. Failing such a choice, British Airways cannot complain
if a court or tribunal takes its own view of what best represents a representative period
in the case of an individual employee who brings a case to it. This in my opinion
matches the Court of Justice’s own expectations: see para 13 above. It would be
surprising if domestic courts or tribunals were to conclude that they could not give
effect to a domestic article using identical language to the Aviation Directive in the
way in which the Court of Justice contemplated that the language of the Directive
envisages. This is reinforced by the Court of Justice’s conclusion that, in a context
where the employer is the State, article 7 is directly effective (and so, by necessary
implication, sufficiently certain for that purpose).
22. I am unimpressed by the submission that, on the basis that the same approach is
to be transposed to the same language in the Merchant Shipping (Hours of Work)
Regulations 2002, the result would be to expose employers to criminal liability for
failing to make an appropriate choice within uncertain parameters. So long as an
employer’s choice is within those parameters, no problem arises, and, if a bona fide
choice were to fall outside such parameters, the likelihood of a criminal prosecution
would appear remote. If the problem were to prove a real one, then the difference
between the present regulations and those imposing criminal liability might itself also
require a different approach to the issue of enforceability if it arose in the latter
context.
23. I am also unimpressed by the submission that regulation 18 militates against or
prevents a conclusion that, in the absence of a choice by British Airways, the
employment tribunal can make its own assessment of “an average over a reference
period which is judged to be representative”. Regulation 18 provides:
“Remedies
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).
(2) An employment tribunal shall not consider a complaint under this
regulation unless it is presented—
(a) before the end of the period of three months beginning with the date
on which it is alleged—
(i) that the exercise of the right should have been permitted (or in the
case of a rest period or annual leave extending over more than one day,
the date on which it should have been permitted to begin), or
(ii) the payment under regulation 4(2)(b) should have been made;
as the case may be; or
(b) within such further period as the tribunal considers reasonable in a
case where it is satisfied that it was not reasonably practicable for the
complaint to be presented before the end of that period of three months.
(3) Where an employment tribunal finds a complaint under regulation 4,
5(1), (4), 7(1) or 7(2)(b) well-founded, the tribunal—
(a) shall make a declaration to that effect; and
(b) may make an award of compensation to be paid by the employer to
the crew member.
(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; and
(b) any loss sustained by the crew member which is attributable to the
matters complained of.”
24. British Airways’ submission is that regulation 18(1) only contemplates
complaints based on a refusal to permit an employee to take paid annual leave, not
complaints about the level of payment for such leave. The only reference to a
complaint based on failure to make a payment is in regulation 18(2)(a)(ii). There it is
linked to a failure on termination of employment to make a payment in lieu of leave
under regulation 4(2)(b), and that is a payment which is based necessarily on an
assessment of what the employee would have earned during a defined period. British
Airways contrasts this position with that under certain other regulations, such as the
Working Time Regulations 1998. Regulation 16 of the Working Time Regulations
entitles a worker to be paid at the rate of a week’s pay in respect of each week of the
annual leave required under regulation 13 and regulation 30 (Remedies) goes on
specifically to deal in regulation 30(1)(a)(i) with refusal to permit a worker to exercise
any right he has under regulation 13, and in regulation 30(1)(b) with failure “to pay
him the whole or any part of any amount due to him under regulation …. 16(1)”,
while regulation 30(5) provides that, where an employment tribunal finds such a
failure, “it shall order the employer to pay to the worker the amount which it finds to
be due to him”.
25. It is true that the Aviation Regulations, unlike the Working Time Regulations,
do not explicitly address complaints relating to the payments for annual leave. But it is
our duty to read the domestic Regulations so far as possible to give effect to the
Aviation Directive, as interpreted by the Court of Justice. Regulation 18(1)
contemplates complaints where an employer has refused to permit the exercise of any
right that an employee has under regulation 4. Regulation 18(4) enables an
employment tribunal to award such compensation as it “considers just and equitable in
all the circumstances having regard to … the employers’ default in refusing to permit
the crew member to exercise his right”. The concept of refusal to permit the exercise
of a right can extend to cover refusal to permit the crew member an appropriate
payment as part of the right to paid annual leave. The employment tribunal can on the
like basis make such award as it considers just and equitable to compensate for such
refusal.
26. The implication of British Airways’ present submissions is that any complaint
that a pilot might have can and would lie not against British Airways, but at most
against the United Kingdom, for failure to implement the Aviation Directive
effectively at the domestic level. I note that this would itself involve the pilot invoking
a forum, presumably a court, which would then have to determine as against the State
the appropriate parameters of a period judged to be representative of the pilot’s
normal pay – the very exercise that British Airways submits is so uncertain that it
cannot be undertaken by the employment tribunal.
27. For the reasons I have given, I do not accept British Airways’ submissions, and
conclude accordingly that the claims should be remitted to the Employment Tribunal
for further consideration of the appropriate payments to be made to the pilots in
respect of the periods of paid annual leave in issue.
TAFB
28. The appellants submit that the Supreme Court can and should without more
conclude that the pilots’ remuneration includes 18% of the sums paid by way of
TAFB. But the 18% is no more than the percentage which Her Majesty’s Revenue and
Customs regards as taxable. The Revenue’s attitude for tax purposes is presently
irrelevant. It amounts at best to a third party’s view on an issue to be determined
independently by the employment tribunal. Even if the Revenue’s attitude for tax
purposes were relevant, it is not in any event clear on what basis the Revenue arrived
at its attitude, or by reference to what considerations.
29. In contrast, British Airways relies upon the test stated by the Court of Justice in
its para 25, which excludes from remuneration relevant to the calculation of holiday
pay, components of pay “which are intended exclusively to cover … costs”. British
Airways stresses the word “intended”. Within such components, the Court of Justice
expressly included “costs connected with the time that pilots have to spend away from
base”. The question arising is therefore whether the payments by way of TAFB were
“intended exclusively to cover … costs”. Although British Airways submits that the
Supreme Court can or should itself determine the answer to this question, we do not
have the material to do so in the agreed statement of facts or elsewhere. Even the
history of TAFB given by British Airways as summarised in para 5 above is no more
than its statement of the position. It must be for the employment tribunal to consider
and determine upon what basis TAFB was agreed and paid during any relevant period.
30. As to the precise test, the concept “intended exclusively to cover … costs”
requires attention to be focused on the real basis on which the TAFB payments were
made. If they were payments that were made genuinely and exclusively to cover costs,
that would, at least prima facie, be the end of the matter. The appellants’ case appears
to be that, although they were designated as being for the exclusive purpose of
covering costs, they were in fact more than some or all pilots might actually need for
or spend on costs, and that the Revenue has, in effect, seen through the description to
a reality which the Supreme Court, or an employment tribunal, should also recognise.
31. As Mr Jeans QC for British Airways accepted, there could no doubt come a
point at which it was obvious that payments nominally made to cover costs were not
required, or were not going to be required, in their entirety, to match actual costs. An
employer who in such circumstances continued to make such payments in their full
amount could then no longer maintain that they were genuinely and exclusively
intended to cover costs. But, in using the phrase “intended exclusively to cover …
costs”, it does not appear that the Court of Justice contemplated any detailed
evaluation of the precise need for or reasonableness of payments which were so
intended. What matters is whether there was a genuine intention in agreeing and
making such payments that they should go exclusively to cover costs. It is on that the
employment tribunal should in my opinion focus.
32. On this basis, I would also remit the issues relating to TAFB to the
employment tribunal, together with those relating to paid annual leave to which para
27 above refers.
Hilary Term
[2010] UKSC 16
On appeal from: [2009] EWCA Civ 281
JUDGMENT
British Airways plc (Respondents) v Williams
(Appellant) and others
before
Lord Walker
Lady Hale
Lord Brown
Lord Mance
Lord Clarke
JUDGMENT GIVEN ON
24 March 2010
Heard on 24 and 25 February 2010
Appellant Respondent
Jane McNeill QC Christopher Jeans QC
Michael Ford Andrew Short
(Instructed by Thompsons
Solicitors)
(Instructed by Baker and
Mackenzie LLP)
LORD MANCE (delivering the judgment of the court)
The relevant law
1. This appeal concerns the concept of “paid annual leave” for crew members
employed in civil aviation appearing in regulation 4 of The Civil Aviation
(Working Time) Regulations 2004 (SI 2004 No. 756) (“the Aviation
Regulations”). These Regulations were introduced under s.2(2) of the European
Communities Act 1972 to comply with the United Kingdom’s obligations under
Council Directive 2000/79/EC of 27 November 2000 (“the Aviation Directive”),
the purpose of which was in turn to implement the European Agreement on the
organisation of working time of mobile staff in civil aviation dated 22 March 2000
(“the European Agreement”) annexed to the Directive.
2. Clause 3 of the European Agreement reads:
“1. Mobile staff in civil aviation are entitled to paid annual leave of
at least four weeks, in accordance with the conditions for entitlement
to, and granting of, such leave laid down by national legislation
and/or practice.
2. The minimum period of paid annual leave may not be replaced by
an allowance in lieu, except where the employment relationship is
terminated.”
3. The Aviation Regulations provide:
“4.-(1) A crew member is entitled to paid annual leave of at least
four weeks, or a proportion of four weeks in
respect of a period of employment of less than one year.
(2) Leave to which a crew member is entitled under this regulation-
(a) may be taken in instalments;
(b) may not be replaced by a payment in lieu, except
where the crew member’s employment is terminated.”
4. The Aviation Regulations and Directive are part of a wider complex of
legislation requiring paid annual leave. Council Directive 93/104/EC of 23
November 1993 (“the Working Time Directive”) introduced a general requirement
that Member States take measures to ensure that “every worker is entitled to paid
annual leave of at least four weeks in accordance with the conditions for
entitlement to, and granting of, such leave laid down by national legislation and/or
Page 2
practice” (article 7(1)). But it excepted various mobile sectors of activity, viz “air,
rail, road, sea, inland waterway and lake transport, sea fishing, other work at sea
and the activities of doctors in training” (article 1(3)), and further stated that its
provisions should not apply “where other Community instruments contain more
specific requirements concerning certain occupations or occupational activities”
(article 14).
5. The Working Time Directive was implemented domestically, with
exceptions matching those of the Directive, by the Working Time Regulations
1998 (SI 1998 No. 1833) (“the Working Time Regulations”). These Regulations
(as amended by the Working Time (Amendment) Regulations 2001 (SI 2001 No.
3256)) provide that a worker is “entitled to four weeks’ annual leave in each leave
year” (regulation 13) and “entitled to be paid in respect of any period of annual
leave to which he is entitled under regulation 13 at the rate of a week’s pay in
respect of each week of leave” (regulation 16(1)). Regulations 16(2) and (3) make
ss.221 to 224 (and by implication also, it has been held, ss.234-235) of the
Employment Rights Act 1996 applicable to the determination of the amount of a
week’s pay for the purposes of regulation 16. Ss.221 to 224 contain a detailed
scheme (originally introduced in the context of redundancy pay) for ascertaining a
week’s pay in the cases of employments with and without “normal working
hours”. The scheme includes provisions governing the differing situations of
remuneration varying (s.221(3)) and not varying (s.221(2)) with the amount of
work done and of remuneration varying according to the times of day or days of
the week in which work is required to be done (s.222); as well as provisions
governing employments with no normal working hours (s.224). Where the
remuneration varies according to the amount, time or hours of work, the
computation of weekly pay falls to be derived from an examination of an average
position over a defined period of twelve weeks preceding the relevant calculation
date, itself defined (ss.221(3), 222 and 224). Under s.234, in the case of an
employee who is entitled to overtime pay when employed for more than a fixed
number of hours in a week, the employee’s “normal working hours” are the
number of hours so fixed – unless the contract also fixes a number of hours of
overtime which the employer is bound to provide and the worker bound to work,
in which case, the employee’s “normal working hours” consist in the total number
of fixed hours (so excluding any voluntary overtime): Tarmac Roadstone Holdings
Ltd. v Peacock [1973] ICR 273 (CA); the same interpretation of s.234 has been
applied to a claim under Regulation 16 of the Working Time Regulations: Bamsey
v Albon Engineering and Manufacturing plc [2004] EWCA Civ 359; [2004] ICR
1083 (CA).
6. The exceptions from the Working Time Directive were in due course
addressed. Council Directive 1999/63/EC of 21 June 1999 gave effect to a
European Agreement dated 30 September 1998 entitling non-fishing seafarers to
paid annual leave on the same basis as was in 2000 provided for mobile staff in
Page 3
civil aviation (paragraph 2 above). This was in turn given domestic effect by The
Merchant Shipping (Hours of Work) Regulations 2002 (SI 2002 No. 2125) (“the
non-fishing Seafarers Regulations”), in language identical as regards paid annual
leave to that of the Aviation Regulations (paragraph 3 above), with the substitution
of the word “seafarer” for “crew member” (regulation 12 ).
7. Directive 2000/34/EC of 22 June 2000 extended the application of the
Working Time Directive to all sectors of activity, excluding seafarers as defined in
Council Directive 1999/63/EC, and gave Member States until 1 August 2003 to
achieve this. However, it also replaced article 14 of the Working Time Directive
with a provision that that Directive should “not apply where other Community
instruments contain more specific requirements relating to the organisation of
working time for certain occupations or occupational activities”. With effect from
2 August 2004, the Working Time Directive as extended and amended has been
replaced by a consolidated Working Time Directive 2003/88/EC of 4 November
2003, but article 7 remains in identical terms to article 7 of the original Working
Time Directive of 1993.
8. The Aviation Directive of 27 November 2000 was a specific Community
instrument within article 14 of the Working Time Directive and was, as stated,
implemented domestically in 2004 by the Aviation Regulations. The extension of
the Working Time Directive in its original and consolidated form to other mobile
workers was further implemented domestically by inter alia The Merchant
Shipping (Working Time: Inland Waterways) Regulations 2003 (SI 2003 No.
3049) made 23 December 2003 and The Fishing Vessels (Working Time: Seafishermen) Regulations 2004 (SI 2004 No. 1713) made 16 August 2004. In these
two sets of Regulations, governing inland waterway workers and sea-fishermen,
regulation 11(1) entitles such workers “to” (or, in the case of the latter, “to at
least”) “four weeks’ annual leave and to be paid in respect of any such leave at the
rate of a week’s pay in respect of each week of leave”. They go on to apply ss.221
to 224 for the purpose of determining the amount of a week’s pay for the purposes
of the right to four weeks’ paid annual leave, and to define the relevant calculation
date for the purposes of the twelve week period as “the first day of the period of
leave in question”. They also provide specifically for a worker to be able to
complain of failure to pay any amount due under regulation 11(1).
9. In contrast, neither the non-fishing Seafarers Regulations of 2002 nor the
Aviation Regulations made 13 April 2004 contain any detailed provisions which
either define the nature or amount of the payment to be made during annual leave
or apply ss.221 to 224 of the 1996 Act for that purpose. Nor do they provide
specifically for the consequences of failure to pay for annual leave (though the
Aviation Regulations entitle a worker to complain of a refusal “to permit him to
exercise any right” to paid annual leave, while the non-fishing Seafarers
Regulations make contravention by an employer of regulation 12, entitling
Page 4
seafarers to paid annual leave of at least four weeks, a criminal offence). These
domestic distinctions can only have been deliberate. It is common ground now that
ss.221 to 224 cannot apply to aviation crew members. This appeal therefore turns
on the meaning of the phrase “paid annual leave”, which is all that the United
Kingdom legislator has relevantly enacted. The phrase cannot of course be
construed in a vacuum. The Aviation Directive is not directly applicable, certainly
not against British Airways which is not an emanation of the state. But it is our
duty, as far as possible, to construe the phrase in the domestic Regulations
consistently with any requirement inherent in the identical phrase used in clause
3(1) of the European Agreement to which Member States are required to give
effect by the Aviation Directive: see e.g. Marleasing SA v La Comercial
Internacional de Alimentacion SA (Case C-106/89) [1990] ECR I-4135, paragraph
8; Pfeiffer v Deutsches Rotes Kreuz, Kreisverband Waldshut eV (Cases C-397-
404/01) [2004] ECR I-8835, paragraphs 111-113 and, most recently, Seda
Kücükdeveci v Swedex GmbH & Co. KG, (Case C-555/07) (judgment of 19
January 2010) paragraphs 44-48.
10. Strictly, the European Agreement is an agreement between private
associations representing airlines on the one hand and aviation workers on the
other. As such, its meaning might be capable of being influenced by the
circumstances in which it was negotiated, any travaux préparatoires and even
statements made during its negotiation. But no evidence of that nature was put
before the Employment Tribunal which considered the present case, and all that
the Tribunal records (paragraph 37) is that the issue of holiday pay “was not high
on the agenda” of those representing the interests of aviation workers when the
Agreement was reached. The reality is that clause 3 of the European Agreement
adopted identical wording to article 7 of the Working Time Directive. The natural
inference is that it was intended to have the same effect in law and there is nothing
to suggest the contrary.
The facts
11. The factual context in which the phrase “paid annual leave” has presently to
be understood and applied is as follows. The appellants are pilots employed by
British Airways plc. In practice the terms of their employment were and are
negotiated with British Airways by the pilots’ union, British Air Line Pilots
Association (“BALPA”). These terms are currently found in a Memorandum of
Agreement (“MOA”) dated 1 April 2005. The Court understands that, for present
purposes, the terms of this MOA mirror those applicable under previous similar
agreements going back to before 2000. Under the MOA (and consistently with the
Aviation Directive and Regulations) British Airways pilots are required to take 30
days’ annual leave and are entitled to take a further two weeks’ leave, save for
pilots with a Gatwick base who are obliged to take 35 days’ holiday and are
entitled to a further seven days of leave.
Page 5
12. Under the MOA, read with collectively agreed “bidline” rules, pilots’
remuneration includes three components relevant to this case. The first consists of
a fixed annual sum. The second and third consist of supplementary payments
varying according to time spent flying (the “Flying Pay Supplement” or “FPS”,
paid at £10.00 per planned flying hour) and time spent away from base (the “Time
Away from Base Allowance” or “TAFB”, paid at £2.73 per hour). The whole of
the FPS is remuneration and taxable. 82% at the relevant time of the TAFB is
treated as having been paid on account of expenses, so that only 18% is treated as
remuneration and taxable.
13. There are limits to the FPS and TAFB which a pilot or other crew member
can earn. Regulation 9 of the Aviation Regulations requires every employer to
ensure that:
“in any month
(a) no person employed by him shall act as a crew member during
the course of his working time, if during the period of 12 months
expiring at the end of month before the month in question the
aggregate block flying time of that person exceeds 900 hours; and
(b) no crew member employed by him shall have a total annual
working time of more than 2,000 hours during the period of 12
months expiring at the end of the month before the month in
question”.
14. The amount of time a pilot spends flying will depend upon his or her route
and roster. It could typically be about 15 days a month. The Court has been given a
schedule of payments made to the first appellant, Ms Williams. This indicates that,
in the calendar year 2006, she took 25 working days leave in periods of between
one and eight days in five different months, and received total fixed pay of
£96,452.36, total FPS of £8,510 and total taxable TAFB of £1,038.49. Total FPS
of £8,510 is indicative (at £10 an hour) of 851 flying hours. If that is so, then, had
Ms Williams continued to fly at this rate during leave periods, it appears that she
would or might have exceeded the maximum permitted annual number of 900
flying hours. Total taxable TAFB of £1,038.49 gives total TAFB of £5,769.39
(£1,038.49 x 100 ÷ 18: see paragraph 12 above), indicative of 2,113 hours away
from base. Again, had Ms Williams continued to fly during leave periods, it
appears that she would or might have exceeded the maximum total annual working
time of 2,000 hours. However, whether this be so or not in her case in relation to
FPS or TAFB, a crew member could clearly be in this position in practice, i.e. in a
position where during the 12 month period prior to taking any particular leave, he
or she had already completed all or almost all of his or her permitted annual flying
or working time.
Page 6
The issue and submissions
15. It is common ground that, upon a true construction of the MOA and so as a
matter of contract, the payment to be made in respect of annual leave is based on
the first component of remuneration only, that is the fixed annual sum. The
question is whether this was and is permissible under the Aviation Regulations,
interpreted in the light of the Aviation Directive. This question was first raised in
2005 following the introduction of the Aviation Regulations on 13 April 2004. The
Court understands that it has been raised not merely by British Airways pilots, but
also by other airlines’ pilots and other aviation crew under contractual
arrangements not before the Court. Before the Employment Tribunal and
Employment Appeal Tribunal, the appellants argued, successfully, that they were
entitled under European and domestic law to payment at a weekly rate based on all
three components of remuneration (which both Tribunals said should be calculated
by analogy with ss.221-4, despite the inapplicability of these sections). The Court
of Appeal accepted British Airways’ contrary case under both European and
domestic law.
16. British Airways’ case operates at various levels:
(i) British Airways’ first submission is that (a) the United Kingdom legislator
must be taken (when deciding not to enact any detailed provisions to
define the nature or amount of the payment to be made during annual
leave or to apply ss.221 to 224 of the 1996 Act: see paragraph 9 above) to
have intended that the amount of any payment to be made to aviation
workers (and non-fishing seafarers) in respect of their annual leave should
be determined by collective or individual contractual agreement between
the relevant parties; and (b) the domestic legislative intention being in this
respect clear, it must prevail, whatever the effect may be of the Aviation
Directive.
(ii) Second, however, if and to the extent that, contrary to the first
submission, the meaning of the Aviation Regulations can be derived from
the Aviation Directive, British Airways submits that the Aviation
Directive is to the same effect.
(iii) (a) Third, British Airways qualifies its first two submissions only to the
extent that it accepts that the payment for annual leave could not, under
domestic or European law, be so low as to prevent or inhibit the taking of
leave. Pay during weeks of annual leave at the rate of £96,452 per annum
or £1,854.85 per week could hardly be said to fall within this
qualification. Accordingly, British Airways contends that the contractual
arrangements between them and their pilots are legitimate.
(b) The appellants’ contrary submission of law is that the Aviation
Directive requires the payment in respect of annual leave of “normal
Page 7
remuneration” in order to ensure that the worker is on leave in a position
which is “comparable” to that when he or she is at work.
(c) There is however disagreement about what this would mean in
circumstances such as the present. In particular, on that basis of what
“periods” is “normality” or any comparison to be established? And on the
basis of what hypotheses? The latter question is relevant where, as may
well be the case here, the worker was subject to annual limits which
would have precluded him or her from undertaking particular work and
receiving particular payments additional to his or her basic salary.
(iv) Fourth, British Airways submits (in response to this submission by the
appellants) that, if the phrase “paid annual leave” involves payment of
“normal” or “comparable” remuneration, then, in the present case,
payment in respect of annual leave based on the fixed annual
remuneration to which pilots are entitled satisfies this requirement.
17. The Court is not presently persuaded by British Airways’ first submission.
Of course, whether domestic legislation is capable of being interpreted consistently
with the meaning of the Directive will or may depend upon what that meaning is.
But, bearing in mind the possible meanings which appear, the Court’s present view
is that it is likely to be possible to construe the Regulations so as to comply with
whatever meaning the Directive may have, even if the domestic position would
otherwise be that for which British Airways contends by its submission at (i)(a)
above. This is so, even though the determination of the relevant weekly rate will
pose difficulties for the employment tribunals who will have to engage with this
exercise, in circumstances where there is no detailed scheme and ss.221 to 224 of
the 1996 Act do not apply.
18. British Airways’ second and third submissions raise questions regarding (a)
the meaning of the phrase “paid annual leave” in the Aviation Directive and (b) the
extent of the freedom for national legislation and/or practice to lay down
“conditions for entitlement to, and granting of, such leave” [i.e. paid annual leave].
The determination of these questions is in the Supreme Court’s view necessary for
the resolution of this appeal. There are statements in the Court of Justice’s recent
case-law (discussed below) which, on their face, are adverse to British Airways’
second and third submissions (paragraph 16(ii) and (iii)(a) above) and favour the
appellants’ case that the Aviation Directive requires payment of “normal” or
“comparable” remuneration (paragraph 16(iii)(b) above). But these statements
were made in very different contexts to the present, and, further, do not
specifically address the point identified in paragraph 16(iii)(c) above. The position
in a case such as the present is not in the Supreme Court’s view acte clair and the
Supreme Court therefore makes this reference.
Page 8
Analysis
19. In case it may assist the Court of Justice, the Supreme Court adds these
observations. British Airways submits that the concept of paid annual leave is to be
understood in the context in which the Working Time and Aviation Directives
were enacted, namely the promotion of the health and safety of workers. That
context appears from United Kingdom v Council of the European Union (Case C84/94) [1996] ECR I-5755; [1997] ICR 443. The Court of Justice there upheld
(save in one presently immaterial respect relating to Sunday working) the validity
of the adoption of the Working Time Directive under article 118a of the European
Community Treaty. Article 118a entitled the Council, by qualified majority voting,
to “adopt by means of Directives, minimum requirements for gradual
implementation” to encourage “improvements, especially in the working
environment, as regards the health and safety of workers”. (Subsequent to the
Treaty of Nice, the relevant article became article 137, entitling the Community to
support and complement the activities of Member States in the fields of, inter alia,
“improvement in particular of the working environment to protect workers’ health
and safety”. It is, since the Treaty of Lisbon, article 153 in similar terms.) In
R(BECTU) v Secretary of State for Trade and Industry (Case C-173/99) [2001]
ECR I-4881; [2001] ICR 1152, the Court of Justice again 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 holding impermissible a provision of the then Working Time
Regulations, according to which no entitlement to paid annual leave arose until an
employee had been continuously employed for 13 weeks. The entitlement to paid
annual leave was “a particularly important principle of Community social law
from which there can be no derogations” (paragraph 43) and the Directive did not
allow Member States either to make subject to any preconditions or to “exclude
the very existence of” a right granted to all workers (paragraphs 53 and 55).
Recital (11) to the Aviation Directive of 27 November 2000 confirms
(unsurprisingly) that its objectives are precisely the same as those of the Working
Time Directive, viz. “to protect workers’ health and safety”.
20. British Airways submits that paid annual leave therefore requires payment
at a level which ensures that annual leave can be taken and enjoyed, that is
payment which does not frustrate or undermine the purpose of the relevant
Working Time or Aviation Directive. The Supreme Court would agree that the
present arrangements with pilots employed by British Airways could not be
regarded as posing any such risk to their health or safety. There is no suggestion
that they do or could prevent or deter pilots or crew members from taking annual
leave (even to the limited extent that they are free not to do so). On the contrary,
the Employment Tribunal referred (paragraph 38) to a consensus that British
Airways pilots not based at Gatwick do in practice take the extra two weeks’
voluntary leave to which they are entitled.
Page 9
21. British Airways also points out that, in United Kingdom v Council, the
Court of Justice referred to Member States’ freedom to lay down detailed
implementing provisions in general terms, when it said in paragraph 47 that:
“Once the Council has found that it is necessary to improve the
existing level of protection as regards the health and safety of
workers and to harmonize the conditions in this area while
maintaining the improvements made, achievement of that objective
through the imposition of minimum requirements necessarily
presupposes Community-wide action, which otherwise, as in this
case, leaves the enactment of the detailed implementing provisions
required largely to the Member States.”
22. Recital (12) to the Aviation Directive also indicates that Member States are
to be free to define any terms used in the annexed European Agreement in
accordance with national law and practice, providing that the definitions are
consistent with the Agreement. In British Airways’ submission, the freedom to
enact detailed implementing provisions and the freedom to leave matters to
national practice allow Member States either to introduce detailed provisions along
the lines of ss.221 to 224 of the 1996 Act or to leave it to contracting parties to
agree on terms as regards pay, so long as these do not frustrate or undermine the
taking and enjoyment of annual leave.
23. The appellants, in relation to this latter point, rely upon further statements in
BECTU as indicating a narrow view of Member States’ discretion under clause 3
of the Aviation Directive. In his opinion in that case, Advocate General Tizzano
said at paragraph 34:
“It is not of course my intention to deny that the expression in
question means that reference must be made to national legislation
and therefore that the Member States enjoy some latitude in defining
the arrangements for enjoyment of the right to leave. In particular, as
the Commission also points out, the reference is intended to allow
the Member States to provide a legislative framework governing the
organisational and procedural aspects of the taking of leave, such as
planning holiday periods, the possibility that a worker may have to
give advance notice to the employer of the period in which he
intends to take leave, the requirement of a minimum period of
employment before leave can be taken, the criteria for proportional
calculation of annual leave entitlement where the employment
relationship is of less than one year, and so forth. But these are
precisely measures intended to determine the ‘conditions for
entitlement to, and granting of, leave and as such are allowed by the
Page 10
Directive. What, on the other hand, does not seem to be allowed by
the Directive is for national legislation and/or practice to operate
with absolutely (or almost) no restrictions and to go so far as to
prevent that right from even arising in certain cases.”
24. The Court of Justice referred to this passage in its judgment (paragraph
53):
“The expression ‘in accordance with the conditions for entitlement
to, and granting of, such leave laid down by national legislation
and/or practice’ must therefore be construed as referring only to the
arrangements for paid annual leave adopted in the various Member
States. As the Advocate General observed in paragraph 34 of his
Opinion, although they are free to lay down, in their domestic
legislation, conditions for the exercise and implementation of the
right to paid annual leave, by prescribing the specific circumstances
in which workers may exercise that right, which is theirs in respect
of all the periods of work completed, Member States are not entitled
to make the existence of that right, which derives directly from
Directive 93/104, subject to any preconditions whatsoever.”
25. British Airways point out that both these passages were specifically directed
to explaining why the Directive did not permit Member States to remove entirely
any right to paid annual leave in particular circumstances. They were not
concerned with the permissibility of defining “paid annual leave” or of leaving it
to parties to define, in a way which does not undermine its taking or its enjoyment.
26. The appellants submit, however, that the Court of Justice’s later case-law
contains statements establishing that “paid annual leave” must now be regarded as
having achieved a closely defined autonomous European meaning: any payment in
respect of annual leave must correspond with the employees’ “normal”
remuneration in order to ensure that the worker is, when on leave, in a position
which is “comparable” to that when he or she is at work. They rely on statements
to this effect in the Court of Justice’s judgments in Robinson-Steele v RD Retail
Services Ltd. (Cases C-131 and 257/04) [2006] ECR I-2531; [2006] ICR 932,
paragraphs 50 and 57 to 59 and in Stringer v Revenue and Customs Commissioner
(Case C-520/06) [R (D) v Secretary of State for the Home Department [2005]
EWHC 728 (Admin) 2009] ECR I-179; [2009] ICR 932, paragraphs 57 to 62. In
Robinson-Steele, the Court of Justice repeated that Member States “must ensure
that the detailed national implementing rules take account of the limits flowing
from the Directive itself” (paragraph 57) and went on:
Page 11
“58 The Directive treats entitlement to annual leave and to a
payment on that account as being two aspects of a single right. The
purpose of the requirement of payment for that leave is to put the
worker, during such leave, in a position which is, as regards
remuneration, comparable to periods of work.
59 Accordingly, without prejudice to more favourable provisions
under article 15 of the Directive, the point at which the payment for
annual leave is made must be fixed in such a way that, during that
leave, the worker is, as regards remuneration, put in a position
comparable to periods of work.”
27. This was, however, again said in a very different context from the present.
Part payments, ostensibly for holiday pay, were staggered over the corresponding
annual period of work and paid together with remuneration for work done, leaving
nothing specifically payable in respect of the weeks of leave. Further, the Court
allowed such staggered payments, where transparently and comprehensibly
attributable to annual leave, to be set off against the claim for holiday pay. An
earlier statement (in paragraph 50) that “workers must receive their normal
remuneration for that period of rest” was also said in a very different context.
There had been agreement to attribute to holiday pay part of a sum which had
previously been being paid as remuneration for work; the remuneration paid for
work done was in other words being effectively reduced, by an amount attributed
to the (staggered) holiday pay.
28. In Stringer, paragraphs 57 to 62, the Court of Justice cited Robinson-Steele
as authority that “the expression ‘paid annual leave’ means that, for the duration of
annual leave …, remuneration must be maintained and that, in other words,
workers must receive their normal remuneration for that period of rest”
(paragraphs 58 and 61), and explained this on the basis that the purpose was “to
put the worker, during such leave, in a position which is, as regards remuneration,
comparable to periods of work” (paragraph 60). Two points however arise. First,
once again, the context was quite different from the present. The issue in Stringer
was whether employees absent on sick leave throughout an entire leave year were
entitled to take their leave after the end of that year or, (since their employment
had in fact terminated) to receive payment in lieu. In that context, the Court
repeated the statements in BECTU (paragraphs 53 and 55: see paragraph 19 above)
that Member States are not entitled to exclude, or make subject to any
preconditions, the very existence of a right deriving from the Directive.
29. Second, the Court of Justice’s use of the word “comparable” in Stringer is
itself to be compared with the Advocate General’s suggestion (in paragraphs 90-91
of her opinion) that a worker should receive an allowance in lieu “equivalent” to
that of his normal pay. The choice of the wording “comparable” to periods of work
Page 12
to explain the concept of normal remuneration was no doubt deliberate. On one
view, it indicates that the Court of Justice had in mind a relationship between pay
while working and pay in respect of annual leave which was or could be more
general and looser than the “equivalence” which the Advocate General would have
favoured. In a sense, of course, even very different things are usually capable of a
comparison, which will highlight the differences. The Court of Justice cannot have
meant comparison in this sense. Nonetheless, it may have meant “comparable” in
the sense of roughly similar (although this still leaves for consideration whether
the right comparison was with pay which the worker could have earned if he or she
had been working instead of on leave, or was earning during some other and. if so
what, period) – or it may, perhaps, have meant sufficiently similar to achieve the
aim of the Directive, that is ensuring that employees could and would take and
enjoy a restful – or at all events restorative – annual leave.
The questions referred
30. In these circumstances, the Supreme Court refers to the Court of Justice
these questions:
(i) 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: (1) 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 (2) to what, if any, extent may
Member States determine how such payments are to be calculated?
(ii) 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?
(iii) 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 (iii)(a) or (b):
(iv) 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?
Page 13
Page 14
(v) 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?
