Holiday Pay and Commission Payments
The awaited decision in British Gas Trading Limited v Mr Z J Lock & Secretary of State for Business, Innovation and Skills UKEAT/0189/15/BA has been handed down.
Mr Lock was an energy trader and earned commission on sales as part of his remuneration package. Upon taking annual leave Mr Lock received his basic salary and any commission on previous sales however as he was unable to create new sales during his leave he did not receive commission.
Mr Lock brought claim on the basis he had suffered an unlawful deduction from his wages. He argued holiday pay should reflect the income a worker should normally receive had he been working.
The tribunal referred the case to the ECJ, who held commission payments must be taken into account when calculating holiday pay under the EU Working Time Directive.
The decision, by the EAT, confirms that the Working Time Regulations 1998 can be interpreted to include commission payments in the calculation of holiday pay in accordance with the four weeks annual leave set out in Regulation 13. The EAT considered this interpretation was compatible with the Directive.
Employers will now need to consider, where employees are remunerated based on commission payments, that any holiday pay that excludes commission payments will be considered an unlawful deduction and may give rise to an employment claim.
IMPORTANT: This blog is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice.
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