European Court Rules Holiday Pay Must Include Commission

Judgment has now been handed down in the case of Lock V British Gas in the Employment Appeal Tribunal. It confirms that employers must pay commission as part of holiday pay.

The ruling was in favour of British Gas salesman Joe Lock.

Like many sales people, Mr Lock received only his basic pay while on holiday, despite making most of his money from commission.

He argued that this was a disincentive to taking holiday, and made a claim to the Employment Tribunal The case was heard originally in April 2012.

Mr Lock’s case was referred by the Tribunal to the European Court of Justice (ECJ). This was to seek clarification on the relationship between holiday pay and commission for workers where commission was a regular part of their payment.

As his commission was linked to the work he carried out, the ECJ decided the commission must be taken into account when calculating holiday pay. It referred the case back to the Employment Appeal Tribunal so the ruling could apply to UK law.

This decision means that employers will have to review their holiday pay allowances.

A ruling in 2014 confirmed that workers who regularly work overtime must have this included in their holiday pay in addition.

Some employers anticipated the outcome and have begun to look at their holiday pay arrangements. Those who ignored the situation will now be under pressure to deal with the issue of holiday pay.

Rather unhelpfully for employers, the issue of the practicalities of how such payments are to be calculated still remains to be determined. Much-needed guidance is required from the government on how holiday pay is to be calculated.

In the meantime, it is likely that Tribunals will approach the issue on a case by case basis.

For advice on any issues raised by this article, please contact a member of the Employment Team at BRM on 01246 555111, or email employment@brmlaw.co.uk.

Glenn Jaques – Director – Employment Law, BRM Solicitors.

About the author

Glenn Jaques is a director and solicitor specialising in employment law at our Sheffield office.

For more advice on this topic or related matters:

0114 3496993 glenn.jaques@brmlaw.co.uk

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