The Supreme Court handed down judgment in the case of British Airways Plc v Williams and Others [2010] UKSC 16 on the 24th March 2010. The case concerned the issue of annual leave and the components included in its calculation.

The requirement that civil aviation workers receive “paid annual leave” is implemented by the Civil Aviation (Working Time) Regulations 2004 (SI 2004/756), which gives effect domestically to the UK’s obligations under Council Directive 2000/79/EC.

Pilots who receive paid annual leave are entitled to a fixed annual sum. Before the Employment Tribunal, the appellants successfully argued for an entitlement to two further components: a "Flying Pay Supplement” and a “Time Away from Base Allowance”. Though this was not a possible reading of the contract, the appellants had argued that in light of the Directive they were entitled to remuneration at a weekly rate on a calculation including all three components.

The respondents had appealed successfully to the Court of Appeal. Before the Supreme Court, a number of issues were raised which related to interpretation of domestic law in light of the European Directive. Accepting the respondent’s submission, the court acknowledged that paid annual leave requires a level which ensures leave can be taken and enjoyed.

Considering previous case law of the European Court of Justice (ECJ), the court discussed the cases of United Kingdom v Council of the European Union (Case C-84/94) [1997] ICR 443 and Stringer v Revenue and Customs Commissioner (Case C-520/06) [2009] ICR 932. Noting that the decisions were relevant to different contexts than the point at issue, namely the definition of paid annual leave, the court determined to refer the questions outlined below to the ECJ:

“(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?

(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?”