05 November 2012
Employment Lawyer Alison Humphry discusses the Williams v BA Supreme Court decision in relation to pay issues
The Supreme Court's decision in Williams and others v British Airways confirms a win for British Airways pilots. Their holiday pay had historically been calculated on the basis of annual salary only and did not include two hourly allowances that were paid on flying time. The ECJ confirmed in 2011 that a worker should receive their "normal" remuneration while on annual leave. The latest stoush in the Supreme Court has been about how to work out what the normal remuneration actually was. BA said that this wouldn't be possible to do without a set of detailed enacted regulations (such as the "week's pay" regulations used for calculating holiday pay for other workers); whereas the pilots argued that an employment tribunal would be capable of this calculation.
The pilots were successful, so it now goes back to an ET for calculation of normal pay, and in particular, a determination as to whether the second allowance, which is paid at least in part on account of expenses incurred (although not wholly so) should be included. This determination by the ET will involve looking at the true reasons for payment of the allowance.
The decision about workers being entitled to receive "normal" remuneration while on holiday, rather than a lower amount, is obviously a welcome one. And anyone who has ever tried to figure out a week's pay under the byzantine provisions of 221-224 of the Employment Rights Act will probably welcome passing the responsibility over to an Employment Tribunal judge to set out the calculation method.
But if you're not a pilot, what are the implications of this case?
Well, the ECJ said that "normal remuneration" should be interpreted as pay "comparable to periods of work" averaged over an appropriate reference period. So there is some chat about whether the legislation on the calculation of holiday pay will meet that definition where individuals work non-guaranteed overtime on a regular basis.
What about Bonus Pay and commission? If an expected contractual or discretionary bonus is paid within the 12 weeks averaging period for a worker under the Working Time Regulations, should this payment now be factored into the holiday pay calculation? Can the 12 week averaging period in national law be challenged as too limited to give effect to a true average if a bonus comes only once per year? All questions now to consider.
If there is a regular discretionary extra element to your pay which is significant, and which is not currently included in your holiday pay, this might be worth looking into.
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