British Gas v Lock
The European Court of Justice (“ECJ”) has confirmed that a worker’s statutory holiday pay must include commission as well as basic salary.
Mr Lock was a salesman on a basic salary with variable commission paid in arrears. The commission depended not on the time worked, but the outcome of that work, i.e. sales achieved. Therefore Mr Lock could not earn commission whilst on leave and would lose income by taking it. He brought a claim for his ‘lost’ holiday pay.
The employment tribunal made a reference to the ECJ to ask if Member States must take measures to ensure that a worker taking leave is paid by reference to commission payments that the worker would have earned if at work, and, if so, how to work out that holiday pay.
The ECJ answered ‘yes’ to the first question, but left the calculation as a matter for the national courts to decide.
This case follows on from the pilot’s case, Williams v British Airways, in which it was decided that, where a worker’s pay consists of a basic salary and variable elements directly linked to work, then holiday pay should be paid on the basis that a worker receives pay comparable to normal pay whilst on holiday.
In Practice
Employment Associate Paul Burton says “This case is going to be of major significance to many employers, particularly smaller ones. Employers should review their contractual leave arrangements with a view to ensuring that commission or other relevant variable payments are factored into holiday pay. It is unlikely the UK’s Working Time Regulations, already hopelessly out of date in terms of European case law, will be amended anytime soon.”
At Frettens, all of our solicitors offer a free initial meeting or chat on the phone to answer your questions. If this article raises issues for you or your business, please call us on 01202 499255 and Kate or Paul will be happy to discuss it with you.
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