Posted by Natalie Birrell (PR Consultant),
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Commission must be included in holiday pay calculations
Following on from the Bear Scotland decision of the EAT in October 2014, the case of Lock and others v British Gas Trading Limited and another, which was referred to the ECJ for an opinion on whether commission should be included in the calculation of holiday pay, has now returned to the Employment Tribunal and a decision has been given. Unsurprisingly the Employment Tribunal has held that there is no issue with interpreting the Working Time Regulations to include commission payments in the calculation of holiday pay in respect of the 4 weeks statutory annual leave provided for under regulation 13. Holiday pay calculated without taking into account commission would be considered an unlawful deduction from wages.
In the circumstances of Mr Lock, his commission payments frequently exceeded his basic pay; and of course he was not in a position to make sales which would earn him commission whilst he was on annual leave. The Tribunal held, following the ECJ decision, that because commission formed a integral part of his normal remuneration, calculation of holiday pay should take this into account to ensure that he was not worse off because he took a holiday and was not able to make sales which earned him commission.
Hardly a surprising decision, given the Bear Scotland decision in October and the previous ECJ decision on this case and also the British Airways case.
This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.
For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.
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