“(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.”
“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.”
“(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?”
“2) In this regard, holiday pay must, in principle, be determined in such a way as to correspond to the worker’s normal remuneration. In any event, an allowance granted as holiday pay will not satisfy the requirements of EU law if it is determined at a level which is just sufficient to ensure that there is no serious risk that the worker will not take his annual leave. 3) In a situation such as that in the main proceedings, in which the level of remuneration varies, a worker is entitled to holiday pay corresponding to his average earnings. The calculation of that average remuneration must be based on a sufficiently representative reference period.”
“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 (see Robinson-Steele and Others, paragraph 58, and Schultz-Hoff and Stringer and Others, paragraph 60). 21 As the Advocate General states in point 90 of her Opinion, it follows from the foregoing that 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 EU law. 22 However, where the remuneration received by the worker is composed of several components, the determination of that normal remuneration and, consequently, of the amount to which that worker is entitled during his annual leave requires a specific analysis. Such is the case with regard to the remuneration of an airline pilot as a member of the flight crew of an airline, that remuneration being composed of a fixed annual sum and of variable supplementary payments which are linked to the time spent flying and to the time spent away from base. 23 In that regard, although the structure of the ordinary remuneration of a worker is determined, as such, by the provisions and practice governed by the law of the Member States, that structure cannot affect the worker’s right, referred to in paragraph 19 of the present judgment, to enjoy, during his period of rest and relaxation, economic conditions which are comparable to those relating to the exercise of his employment. 24 Accordingly, any inconvenient aspect 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 cited above, 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 (see Robinson-Steele and Others, paragraph 58, and Schultz-Hoff and Stringer and Others, paragraph 60).”
“In the light of all the foregoing, the answer to the questions referred is that Article 7 of Directive 2003/88 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.”
“The court…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.”
“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.”
“Mr Ford QC submits that the overarching principle is that the purpose of this requirement is to ensure that workers benefit from remuneration comparable to that paid in respect of periods of work; or to put it another way, do not suffer any financial disadvantage as a result of taking annual leave. Because any financial disadvantage may deter a worker (subject to de minimis principles) it is incompatible with the objectives of Article 7 to exclude pay for voluntary overtime from the calculation of pay for Regulation 13 annual leave.”
“66. The question for me is whether, in law, and on what basis, each of the allowances in play in this case (a total of 29 within the respondent’s systems, although I am not called upon to make decisions about all of them) are pay for the purposes of CAWTR. I take the following points of general principle: - 66.1 The right to paid leave is a matter of fundamental importance of EU law; 66.2 Holiday pay should be calculated in a way to make sure, so far as possible, that the worker is not deterred from exercising a right to paid leave by reason of any financial disadvantage which might be suffered; 66.3 The level of holiday pay should therefore correspond to normal remuneration; 66.4 What is normal may be decided by taking a representative averaging approach; 66.5 That approach is more likely to include payments which are broadly regular in a temporal sense (Ms Barsam suggested payments every four to five weeks as an instance of regularity); 66.6 It may also include payments which represent a form of pattern and regularity, excluding exceptional contingencies; 66.7 An intrinsic link between payments and performance of the contractual tasks is critical (decisive, in the word of the EAT in Dudley); 66.8 Ms Barsam submits that the EAT is wrong in Dudley to state that intrinsic link is a sufficient criterion, and submits that it is necessary, but it is also to be linked to payment “with sufficient regularity to constitute normal remuneration”
“Components of the worker’s total remuneration which are intended exclusively to cover occasional or ancillary costs arising at the time of performance”; 66.10 The assessment by the tribunal must be carried out on the basis of an average over a representative reference period, agreed in this case to be the period of one year starting 1st April in the year preceding payment.”
“67.1 The burden of proof rests on each claimant individually to show that each allowance is part of his or her normal pay; 67.2 A judgment or concession as to whether an individual allowance is capable in principle of being normal pay does not determine each claimant’s claim for that element of pay, at all, or in any stated period; 67.3 The perception of the claimants, no matter how honest, is not a satisfactory criterion: the assessment of what is normal, or regular, is an objective matter for the tribunal. … 67.8 Discussion about meal allowances led Ms Barsam to stress, more than once, the importance of the tribunal focussing on intention not effect. While that correctly states the law indicated by the CJEU, I accept that it is also something of an artificial construct to examine the intention of a corporation in introducing an allowance which goes back to the 1960s (if not before). I accept the point of principle, which is to be sure to understand intention and effect separately. In the same context, there was reference to the involvement and view of HMRC, on which Ms Barsam referred me to the judgment of the Supreme Court in Williams, that that was the view of an independent third party considering matters which were not before the tribunal. 67.9 The only submission on proportionality was advanced by Ms Barsam in relation to commission payments. I deal with the point in the specific context of commission. … 67.11 [A common sense point is] the flat rate point. I accept that faced with the choice between paying cabin crew a fixed flat rate sum for a particular item, or verifying claims and receipts (potentially for thousands of items each day), BA management, in the exercise of its discretion, took the reasonable choice of the former. It was reasonable to operate a flat-rate system, which may prove more generous than reimbursement, if the alternative (receipt-based reimbursement) would be disproportionate and burdensome in work, and potentially damaging to goodwill and morale.”
“70. The discussion of meal allowances had areas of common ground as well as areas of dispute. 71. An entitlement to meal allowance is triggered when a member of cabin crew is on duty at any mealtime. The trigger is being on duty at the time, not eating the meal. The relevant time may be any of the base time, or the destination time, or the time according to the location of the employee. Ms Kerr submitted that time differences could trigger two allowances for the same meal. 72. The trigger time may occur at a time when the employee is unable to spend money on a meal, eg if on board a flight, or during a turnaround when there is insufficient time to leave the aircraft. The allowance is nevertheless payable. 73. The allowance is payable even though food for crew is always available on board, or if the member of cabin crew has brought their own food on board (as I was told was not unusual in practice). 74. The meal allowance is also payable in respect of meal times during rest at an overseas location. A long-haul flight involves, for example, two nights in a hotel at the destination, and the meal allowances are triggered according to the local time at the crew hotel. 75. The allowances are fixed, flat-rate amounts. They are reassessed each year with reference to worldwide consumer price data from the IMF, and overseas rates are set, not for a country but for a destination, so that different destinations in the same country may have different rates. Meal allowances were frozen between 2008 and 2012. Meal allowances were not within CFP, and although inclusion within CFP does not seem to me a matter of great importance, exclusion from CFP for the stated reason, that the element is not pay but is subsistence, is a factor for consideration. 76. Meal allowances are set by the respondent for overseas destinations in consultation with the unions, and by reviewing the cost of meals in the hotel used by Cabin Crew when overseas. The formula for calculation is for a generous full meal, described as including, for example, a seven-course dinner. The respondent reviews these rates from time to time to ensure that they maintain their value, as costs may change according to the value of currency, and similar factors. The process is undertaken by consideration of menus, and the same processes are initiated when, for example, the respondent initiates a new long-haul route and selects a crew hotel. 77. The respondent does not, at any time, require an employee to produce a receipt or proof of having spent the allowance on food. It is perfectly open to an employee to be paid the overseas rate for a seven-course dinner, and make other arrangements for his or her meal. 78. HMRC does check crew members’ receipts on a random basis, and I understand that Cabin Crew are advised by the respondent to keep receipts for overseas meals. There has been a protracted process by which HMRC reviews payments, and assesses a percentage of them to tax, on the basis that the HMRC assessment is that a particular proportion of the meal allowance is an emolument from employment which is liable to tax. The 2009 HMRC audit set the taxable proportions as 35% for WWF and 46% for EF. 79. Ms Barsam’s submission was that the tribunal must attach no weight at all to the effect of meal allowance. In other words, if I find that it contains an element of windfall (which seems inescapable) that should attract far less weight than might appear. She attached particular weight to the language of the CJEU in Williams, quoted by the Supreme Court (paragraph 11 of the latter, incorporating paragraph 25 of the former): “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 task 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” 80. It was perhaps with reference to the emphasised words (emphasis added) that Ms Kerr wrote: “Meal allowance was historically introduced as a cost-effective way for both the company and the crew to have an increase in pay. There would be savings to both the employee and BA via the tax regime.” 81. Mr Ayres gave evidence that the meal allowance arrangement was negotiated with the unions in the 1970s, has not changed, and that reforming it is one of the things that “are best left undone”
“The claimants submit that the Supreme Court can and should without more conclude that the pilot’s remuneration includes 18% of the sums paid by way of TAFB. But the 18% is no more than the percentage which HMRC 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 refence to what consideration. In contrast, BA relies upon the test stated by the Court of Justice, which excludes from remuneration relevant to the calculation of holiday pay, components of pay “which are intended exclusively to cover costs.”
“Given the finding that meal allowance is, in principle, to be counted as pay in the calculation of CAWTR pay, what is the correct approach by which the relevant calculation to be made?”
“In the case in the main proceedings, as the Advocate General’s Opinion, the commission received by Mr Lock is directly linked to his work within the company. Consequently [my emphasis] there is an intrinsic link between the commission received each month by Mr Lock and the performance of the tasks he is required to carry out under his contract of employment.”
“… decisions are not to be scrutinised closely word by word, line by line, and that for clarity’s and brevity’s sake industrial tribunals are not to be expected to set out every factor and every piece of evidence that has weighed with them before reaching their decision; and … what is out of sight in the language of a decision is not to be presumed necessarily to have been out of mind. It is our duty to assume in an industrial tribunal’s favour that all the relevant evidence and all the relevant factors were in their minds, whether express reference to that appears in their final decision or not …”
“Whether there has been a series of deductions or not is a question of fact: “series” is an ordinary word, which has no particular legal meaning. As such in my view it involves two principal matters in the present context, which is that of a series through time. These are first a sufficient similarity of subject matter, such that each event is factually linked with the next in the same way as it is linked with its predecessor; and second, since such events might either be stand-alone events of the same general type, or linked together in a series, a sufficient frequency of repetition. This requires both a sufficient factual, and a sufficient temporal, link.”
“127. Secondly, we agree with the Court of Appeal that the word “series” is an ordinary English word and that, broadly speaking, it means a number of things of a kind, and in this context, a number of things of a kind which follow each other in time. Hence, whether a claim in respect of two or more deductions constitutes a claim in respect of a series of deductions is essentially a question of fact, and in answering that question all relevant circumstances must be taken into account, including, in relation to the deductions in issue: their similarities and differences; their frequency, size and impact; how they came to be made and applied; what links them together, and all other relevant circumstances. 128. Thirdly, we also agree with the Court of Appeal that a contiguous sequence of deductions of a particular kind is not a requirement of a series, though it may be a relevant factor in deciding whether the deductions constitute a series. That is not to say that deductions which do follow each other in time necessarily constitute a series; nor does it mean that a series of unlawful deductions remains intact when they are interrupted by a lawful payment. All will depend on the nature and reason for the deductions of which complaint is made, and whether and, if so, how any lawful payment has anything to do with them. 129. Fourthly, it is helpful and important to identify the alleged series of unlawful deductions upon which reliance is placed and the fault which is said to underpin it. In these appeals, the series is a series of deductions in relation to holiday pay. Each unlawful deduction is said to be factually linked to its predecessor by the common fault or unifying vice that holiday pay was calculated by reference to basic pay rather than normal pay, and so regardless of any overtime or allowances during the reference period. As the Court of Appeal observed, there would have been appropriate payments of pay between the holiday payments while the claimants were at work which would not have been subject to unlawful deductions. But identifying the alleged series as a series of deductions in relation to holiday pay meant those lawful payments whilst the claimants were at work did not of themselves interrupt the series. 130. More specifically, we are also satisfied that the Court of Appeal made no error in finding: (i) that each unlawful deduction in relation to holiday pay was factually linked to its predecessor by the common fault or unifying vice that holiday pay was calculated by reference to basic pay rather than normal pay; (ii) this method of calculation linked all payments of holiday pay, and it did so consistently from23 November 1998 ; (iii) it mattered not that the interval between these payments was from time to time in excess of three months; and these intervals of more than three months did not, in and of themselves and as a matter of law, break the series or bring it to an end; and further, (iv) the series was not broken or brought to an end by any correct and lawful payment of holiday pay in so far as that payment came about (in common with the other payments in the series) by virtue of the application of the common fault or vice that holiday pay was calculated by reference to basic pay rather than normal pay. In these cases, each payment was still linked to its predecessor by the common fault or vice that holiday pay was calculated by reference to basic pay rather than normal pay.”
“An important general purpose of the legislation we are concerned with in this appeal is to give workers a measure of protection from exploitation and, as Lord Leggatt explained in Uber BV v Aslam[2021] UKSC 5 ,[2021] ICR 657 , para 71, it is, among other things, to protect vulnerable workers from being paid too little for the work that they do.”
“54. Two questions arose from this. The first was whether the respondent was entitled to, and did, designate the first tranche of leave taken by each individual in each leave year as statutory leave taken under WTR, or whether the claimants were each entitled to take their first tranche of leave as contractual leave. Ms Barsam drew attention to paragraph 82 of Bear Scotland, in which the EAT rejected the tribunal’s view that it was a matter of choice for the claimant. “In the absence of detailed contractual provisions the power of an employer to exercise control, which is inherent in every contract of employment, means it is entitled.. to direct when holiday should be taken. It therefore has the power to direct when, within the leave year, [statutory] holiday should be taken.” 55. Mr McNerney submitted that there was “no credible way” of assigning or designating a particular day as one or the other, as nobody had been told at a particular time that leave was designated as contractual or statutory. Ms Barsam in reply stressed that the respondent is rightly prescriptive in the grant of holiday rights, and indeed that parts of the claimants’ case and grievance has been about the degree of prescription. She submitted that the hierarchy of obligation to which the respondent was subject began with the obligation to grant statutory leave. Perhaps unfairly, I asked counsel in closing whether either had ever in practice encountered a situation where an employer had expressly designated a specific period of leave as statutory or contractual, and neither had (I add that I am in the same position). 56. I respectfully adopt the above reasoning of the EAT. In so doing, I note two further factors in particular. While CAWTR and WTR create rights for workers, they impose obligations on employers. It is for the employer to fulfil its obligation to grant leave by allocating and designating leave as appropriate. Secondly, I take the quotation from the World Wide Agreement as stating at three separate points that WTR leave has priority and, indeed, imposing on crew the obligation to “ensure the WTR leave is discharged.”
“132. The issue here concerns the finding of the Court of Appeal, at para 119, in agreement with the Tribunal, that a worker is entitled to enjoy leave from whichever legal source it may be derived and that there is no requirement as a matter of law that the leave derived from different sources must be taken in a particular order. 133. The Appellants contend that the Court of Appeal ought instead to have distinguished between the types of annual leave to which police officers and civilian workers are entitled, and ought to have held that the minimum entitlement to annual leave, based on EU law, must be or be treated as having been taken first, followed by any additional leave such as the additional 1.6 weeks allowed by domestic law and the two days allowed by the Respondents’ terms and conditions. They rely in support of this submission on the approach described by Langstaff J in Bear Scotland, at paras 115-118, and his observation that the description of leave as “additional leave” suggests that the dates of it should be the last to be agreed upon during the course of a leave year. They continue that the Court of Appeal’s failure to do that has implications for: (i) time limits, because compliant payments of annual leave or substantial gaps between the taking of WTD derived leave may interrupt a “series” of payments for the purposes of article 55(3) ERO; and (ii) quantum because of the “series” point, and in any event because annual leave taken at different times throughout the year will attract a different level of payment depending on the “normal” pay leading into such leave. 134. There can be no doubt that the significance of this issue is considerably diminished by our conclusion that a series of deductions or underpayments does not come to an end, as a matter of law, simply because it has been interrupted by a lawful payment. Nor does an interval of more than three months between deductions or underpayments necessarily mean that the relevant series has been broken. Be that as it may, we are satisfied that the Court of Appeal came to the right conclusion, as did the Tribunal. 135. First, we agree with the Court of Appeal that the fact that some of the leave to which a worker is entitled under domestic law may be described as “additional” says nothing about when and how it must be taken relative to other leave to which the worker is entitled in that same period under the WTRs (NI) and for which the worker is entitled to be paid his or her normal pay including an amount to reflect overtime worked. 136. Secondly, the ultimate source of the entitlement to leave, whether it be in EU or purely domestic law, has no bearing on the importance of that leave to workers who are likely to look at their annual leave entitlement as a composite whole. 137. Thirdly, if and in so far as it is not practicable to distinguish between different types of leave then all the leave to which the worker is entitled must form part of a single, composite pot, and the Tribunal and Court of Appeal were right so to conclude. 138. Finally, we accept the submission made on behalf of the Respondents that for the Appellants now to contend that a worker was taking leave from a particular entitlement at a particular time and so argue that the series of deductions they suffered was interrupted and brought to an end, would be to deny them sums which they ought to have been paid, and looking forward, antithetical to the purpose of the entitlement to paid leave, which is to ensure that they take the holidays they need to maintain their health and wellbeing.”
“I find that for each claimant, commission earnings were a very minor part of the pay package, and certainly not a significant element in pay. I find that the sums involved were such that it highly unlikely that their exclusion from holiday pay had, or would have had, any deterrent effect in taking annual leave; and there was in any event no evidence to that effect.”
“Or is it required that the pay should either (a) correspond precisely with or (b) be broadly comparable to the worker’s ‘normal pay’.”