Commission & Holiday Pay

1 April 2015

Lock v British Gas

On 25 March 2015, the Leicester Employment Tribunal handed down their long-awaited decision as to whether holiday pay should take commission into account.

Mr Lock, a salesman on a basic salary with variable commission paid in arrears, brought a claim against British Gas for ‘lost’ pay after taking leave, during which he did not receive any remuneration for commission above his basic pay. Specific questions were referred to the Court of Justice of the European Union. In their response, they stated that holiday pay should indeed take account of commission pay that would have been earned had the worker been at work, though they held that it was for national courts to decide the method of calculation.

The case was later remitted to the Employment Tribunal, who have held that holiday pay should include an element based on commission. This will clearly impact on future holiday pay entitlements for those employees who receive commission payments as part of their remuneration. Back-dated claims will be limited to a two-year cap, due to legislation that is being introduced which will take effect on 1 July 2015.

In the light of the above, if you wish to discuss the impact of this decision on your holiday pay calculations or your terms and conditions of employment, please feel free to contact us.

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