Holiday Pay Should Include Commission

2 March 2016

Lock v British Gas

In April last year, we brought you the Employment Tribunal decision which held that holiday pay should take commission into account. On Monday 22nd February 2016, the appeal against this decision was dismissed. The General Secretary of the union UNISON has declared the ruling “a victory for workers”.

This decision means that, for any staff who receive commission as part of their remuneration, holiday pay must include an element that accounts for commission. The holiday pay should not just be based on basic salary. The actual pay reference period over which the commission element should be calculated has not yet been established, and this is likely to be resolved by future case law.

This decision is certainly one that is far more favourable to employees, as reflected by the triumphalist tone adopted by UNISON. However, British Gas have asked for permission to take the case to the Court of Appeal for a definitive ruling. There are many claims that had been stayed pending yesterday’s decision and it is likely that the employers in these cases will be asking for the stay to remain in place until a definitive ruling has been passed down. Employers therefore need to carefully consider any changes they may make in their calculation of holiday pay. 

At Alpha, we have a vast experience in providing bespoke advice on HR and employment law developments and how these affect your business. We offer a commercial outlook and do not sit on the fence. If you would like to have Alpha on your side, please feel free to contact us.


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