Cutting a long story short

Holiday Pay and Commission – what next?

Holiday pay and commission – what now?


When calculating holiday pay, the historical approach taken by tribunals has been a restrictive one in that they have held that commission does not need to be taken into account when working out what holiday pay a worker is entitled to.


In the case of Lock v British Gas, the Court of Justice of the European Union had to consider whether commission payments should be taken into account when calculating holiday pay.


British Gas have a sales force which are paid a basic salary only along with commission on sales they achieve. In Mr Lock’s case, his average commission made up about 60% of his salary. When he took his holiday however he was paid only his basic pay. Mr Lock brought a tribunal claim for his outstanding holiday pay and the tribunal asked the Court of Justice to consider if commission should be taken into account when calculating holiday pay.

The Court of Justice decided that they would have to consider whether the commission was intrinsically linked to the work the employee had to carry out under this contract of employment. In this case the Court of Justice decided that the answer was yes. Therefore commission should be taken into account when calculating holiday pay.

How does this affect employers?

Employers can no longer pay staff who earn commission their basic salary only when they are on holiday. This is likely to create practical difficulties and extra costs for employers trying to administer annual leave.

In addition, employees may now make claims against their employers if they have failed in the past to take commission into account when calculating holiday pay.

What we can do for you

This is likely to cause employers significant difficulties if they have staff who earn commission. Employees may seek to take their holiday after a lucrative period when they have earned a lot of commission. It is also not clear what the reference period will be that an employer has to use to calculate holiday pay. We can help you with these difficult problems.


Trouble from a Badly Drafted Letter

Can you get into trouble from a badly drafted letter?

Can a badly worded letter get you into trouble?


All employers will be familiar with the concept that it is unlawful to treat a disabled employee unfavourably because of something arising from their disability unless the employer can show the treatment was justified (a proportionate means of achieving a legitimate aim). This is set out in the Equality Act.


In a recent case, an employee brought a claim for unfair dismissal and disability discrimination due to a poorly written letter written to her by her employer.

What happened?

Ms Lawrence worked for CRI as a team leader and went on sick leave with depression. She was assessed by an occupational health specialist as suffering from post natal depression and she was therefore unable to return to work or even undertake any interim duties.

Her employer started a capability procedure but the letter inviting her to the capability hearing was badly drafted and read as if it were an invitation to a disciplinary hearing. Ms Lawrence chose not to attend the hearing as she was of the view that her employer had all the relevant information and after the meeting she was dismissed on grounds of ill health.

Ms Lawrence brought claims for unfair dismissal and disability discrimination.

The employment tribunal held that her dismissal was unfair and found specifically that the letter had intimidated her and put her off from attending. The majority of the tribunal also found that she had been discriminated against in breach of the Equality Act. The tribunal acknowledged that the decision to dismiss was a legitimate aim but they found that the decision was not justified as way the letter had been drafted prevented the employee from being consulted. She was awarded £750 for injury to feelings.

The Employer appealed the discrimination finding

CRI appealed against the discrimination finding and this was allowed by the EAT. It held that the tribunal had mistakenly taken into account the letter when deciding if dismissal was a proportionate means of achieving a legitimate aim. The letter was only part of a procedure and was not relevant to the reason why Ms Lawrence was actually dismissed.

Is there a lesson here for employers?

Whilst ultimately no discrimination was found, this is a useful reminder of the need to exercise care when drafting letters and to make sure they are suitably phrased to deal with the situation in hand. Using terminology relevant for a disciplinary process in a capability situation will always put an employer on the back foot and could protract a case, or, as happened here, lead to costly litigation.

What we can do for you

We can help you draft any letters or policies you need for any employment issue. We can also provide you with a disciplinary pack/capability pack of relevant policies and documents at a fixed price so that you have carefully written documents to use going forwards.

Cutting a long story short

What is Early Conciliation?

What is early conciliation?


In a further attempt to encourage parties to an employment tribunal claim to consider settlement and to try and make the tribunal system more efficient, any Claimant who issues a tribunal claim will now have to enter into a period of conciliation with ACAS before they are able to proceed with their claim.


This new system of negotiation came into force on a voluntary basis on 4 April 2014 and there were initially 4000 applications to use this service which is run through ACAS. It is now mandatory (as of 6 May 2014) and may well result in a further drop in the number of claims being heard by employment tribunals.

What does it involve?

Any claimant who wants to bring a claim will now have to provide certain information to ACAS. This is called ‘prescribed information’ and is relatively straightforwards. This information will be given to an early conciliation support officer who will then make contact with a prospective claimant and check that they wish to proceed. If they do, the information will be sent to a conciliation officer.

Once the conciliation officer contacts the Claimant, they will need to get confirmation that the Claimant is happy for the respondent to be contacted. If both parties are happy to participate in early conciliation, the conciliation officer must try to promote a settlement within one month from when the Claimant first made contact with ACAS. This period can be extended.

If the parties cannot be contacted or if they do not wish to participate in early conciliation, then an Early Conciliation (“EC”) certificate must be issued. The same applies if no settlement is reached. The EC certificate will have a unique reference number which the Claimant will need if they wish to go on to present a claim.

Does this help employers?

Whilst there is no obligation on an employer to engage in early conciliation, it will probably be helpful to do so. Firstly, it means that it will enable employers to work out what the extended time limit will be for a Claimant to bring a claim. Secondly, it will help employers find out more about a prospective claim. Employers could usefully take advantage of this process to find out useful information. It may also be possible to resolve a potential case on lower terms than if the claim goes through to a hearing as it would avoid the Claimant having to pay the applicable fees.

What we can do for you?

Tribunal claims can be difficult and costly. We can support you through the whole process, identifying opportunities for possible settlement where they arise, defending them robustly where necessary and carrying out the advocacy if required.
Please contact Karin Henson at [email protected] for further information.