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Holiday pay and commision – the next chapter

Holiday pay and commission – the next chapter

Issue

The issue of holiday pay and commission has had a long history through the courts and on Friday, the Court of Appeal handed down its judgement in the latest episode.

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 overtime.

Decision

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.

How does this affect employers?

This decision will be of concern to employers.  The Court of Appeal was persuaded on the following points:

  • That the Working Time Regulations were only implemented to give effect to the Working Time Directive; and
  • That the UK government must have intended the Working Time Regulations to fulfil the requirements of the Working Time Directive, even if some of the obligations (such as including overtime and commission in holiday pay calculations) only became clear several years later.

Of course, in the light of Brexit, it will be interesting to see what the government decide employees are entitled to now that the UK will be leaving the UK.

What we can do for you

It will be important not to make any hasty decisions as an employer.  However, employers may now receive some enquiries from the employees as to whether their holiday pay is correct.  We can support both employees and employers in this regard.

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