Holiday pay and commission – the final decision……..

Holiday pay and commission – the final decision……..

Issue

The issue of holiday pay and commission has had a long history through the courts and we now have the latest instalment in this long running saga.

Facts

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.

The case has been in the courts for some time now and its significance is that it challenges whether British law (i.e. the Working Time Regulations 1998) can be interpreted purposively so as to give effect to EU case law which requires holiday pay to include what individuals consider to be normal elements of pay, such as results based commission and non-guaranteed overtime.

Supreme Court Decision

Initially, the Court of Appeal upheld the conclusion of the EAT and has held that holiday pay must include an estimation of results based commission when calculating holiday pay.  Leave to appeal was sought but on 1 March 2017 this was refused by the Supreme Court.

How does this affect employers?

We now know that representative results-based commission and non-guaranteed overtime (overtime which workers are contractually obligated to perform) must be included in the calculation of holiday for the first four weeks of holiday under the Working Time Regulations.

What we can do for you

This right applies now and so employers need to be aware that employees may start to question their holiday pay.  The issue of truly voluntary overtime remains unclear for the moment.

We can advise both employers and employees on where they stand legally.

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