What is included in holiday pay?

Issue

  • The meaning of “paid annual leave” under the Working Time and the Civil Aviation (Working Time) Regulations

Scenario

  • 2,750 pilots were paid basic pay during annual leave. They claimed their holiday pay should include additional, supplementary payments

Case significance

  • Neither the Working Time Directive (WTD) or Aviation Directive (AD) specify the calculation of holiday pay but the relevant provisions of AD and WTD are the same
  • Although a case brought by pilots, this case has significance beyond aviation workers as regards calculation of holiday pay
  • Today’s ruling is not determinative (pending further ET review) but is an important reminder to employers to control their pay regimes

CJEU framework

  • The CJEU in Robinson-Steele (C-131/04 and C-257/04) suggests holiday pay= “normal pay
  • On referral CJEU ruled normal pay includes pay
    • “intrinsically linked to performance of tasks and included in the total remuneration” and
    • relating to the “personal and professional status” of workers, such as pilots but not
    • “occasional or ancillary costs which facilitate working” eg travel expenses

Supreme Court’s decision

  • SC has remitted the question of which elements of pay constitute ‘normal pay’ (as per CJEU guidance) and appropriate reference period to the ET
  • SC did not believe it had sufficient details to determine basis and reasons for supplements in this case
  • ET will now decide how CJEU’s ruling is applied in practice

Learning points

  • Employers must understand all aspects of pay and why it is paid. Should it be included in holiday pay?
  • Supplements may have unclear historical origins or may have been inherited
  • Communicate basis of all payments to workers

British Airways plc v Williams [2012]