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Employment Tribunal Rules British Airways Has Been “Topping Up” Cabin Crew Wages With Tax-Free Allowances

Employment Tribunal Rules British Airways Has Been “Topping Up” Cabin Crew Wages With Tax-Free Allowances

Eight members of British Airways cabin crew with more than 200 years of service amongst them took the Heathrow-based airline to court, claiming that various allowances they received should form part of the calculation for their holiday pay. The law firm that represented the crew claims British Airways was using tax-free meal allowances as a “backdoor way of topping up basic wages.”

Along with a basic wage, cabin crew receive up to 29 different allowance payments – from a meal allowance used for when crew are staying in a hotel downroute, to a special training payment. Unlike their basic wage, these allowances aren’t taxed and they don’t go towards calculating an annual holiday payment.

In effect, the eight crew members argued, British Airways was artificially reducing its liability towards them through the use of allowances that everyone knew topped up their basic wage and wasn’t just being used for the purpose it said it was for – a classic example being meal allowances.

The tribunal certainly had its work cut out – along with around 1,900 pages of evidence to go through, the court had to make it clear that it didn’t exist to “entertain grievances” or to clear up workplace “myths and legends”.

But despite those difficulties (and quite a few others), the court concluded that the allowances should form part of the calculation to determine holiday pay – a decision that could significantly increase costs for British Airways to pay its cabin crew.

“Six BA cabin crew have been successful in convincing an Employment Tribunal that in reality their meal allowances and other allowances paid in addition to basic pay were, in fact, a way of increasing basic wages,” a statement from St John Buildings, the barristers who represented the crew explained.

“The Employment Tribunal has specifically decided that meal allowances were actual pay and should go into the calculation for what cabin crew should receive when they take their Working Time Regulations annual leave.”

For its part, British Airways argued that faced with a choice of paying a generous meal allowance that might not necessarily be used solely on food or allowing crew to go hungry, it had decided to err on the side of generosity.

The court couldn’t determine what BA’s true intent was but nevertheless decided the meal allowances should form part of the holiday pay calculations.

That’s a conclusion British Airways has decided to challenge and an appeal is set to be heard in April. In a separate development, the cabin crew union BASSA has criticised the crew who brought the claim saying “they have not helped our cause”.

British Airways has apparently failed a recent tax audit of receipts to prove cabin crew were using the meal allowances to actually pay for meals. As a result, crew could stand to lose as much as £1,000 per year in allowances because the tax authorities could start to tax the full amount.

British Airways has been contacted for comment.

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