The Court of Appeal confirmed on 7th October the long-waited verdict in the case of Lock v British Gas. It concluded, as expected, that all employers will be required to pay commission as part of holiday pay where applicable.
If you remember …..
The European Court of Justice (ECJ) had previously made clear that pay for workers on holiday needs to include all elements of pay that are normally paid to employees, and not just their basic salary.
In Lock v British Gas, the defendant had argued that UK legislation should be followed rather than interpreting the UK legislation in line with EU law on holiday pay. The EAT upheld the tribunal’s decision that UK legislation should be interpreted in line with EU law on holiday pay. It said that the right to paid leave is a key aspect of EU law from which there are no derogations.
In this case, a large proportion (roughly 60%) of Mr Lock’s normal pay was made up of results-based commission. He received only basic pay during holiday periods (or shortly afterwards – due to not earning commission whilst on leave). The EAT has confirmed that his results-based commission must be included when calculating holiday pay and that it was possible to read words into the Working Time Regulations to achieve this.
What this means for employers is that employees (and workers) should be paid what they would ordinarily earn during periods of annual leave. If employees usually earn overtime, or commission or other regular payments then these should be included within holiday pay.
So what’s happened now…
Well basically the same decision has been confirmed. British Gas took the case to the Court of Appeal and they confirmed the decision from the previous rulings. Commission and other elements of normal pay should be included in holiday pay. British Gas may go on to further appeal but the decision so far of all Courts should be taken as a guide that on this subject they are not going to be moved, regardless of Brexit.