dwshimoda - in answer to your question, in my layman's understanding of the law, it entitles employees to annual leave paid at their full rate of pay.
Imagine you're a supermarket worker, paid by the hour to stack shelves (let's call it stack pay), how would you ever get paid holiday if you were only ever paid for the hours you were putting the cans on the shelves?
Whatever elements of pay accrued in their contracted hours are labelled, be it flight pay, breathing pay, or anything else, they go to make up an individual's full pay and BALPA's case is these should be paid during periods of leave.
Don't get hung up on the fact that it's BA that BALPA has chosen to challenge on this point - it could have picked any one of at least half a dozen UK airlines I can think of. The majority of UK pilots stand to benefit if BALPA wins this.
PS Please cut the nonsense about BALPA only looking after BA pilots. Much time, effort and funds is expended by the association my airline, and it's actually quite insulting to hear this sort of rubbish. BALPA has dropped the ball on the pay-to-fly stuff, but to be honest it's more a reflection of it's members, who are finally waking up to the threat this poses to all of us.