Commission Should Be Included In Holiday Pay

UK Supreme Court Rules Commission Must be Included in Holiday Pay Calculations - Here Is What You Need To Know

The Employment Appeal Tribunal has this week confirmed that results-based commission (which depended upon results and not how much work was done) must be included in holiday pay.

Mr Lock only received basic pay during holidays taken under the Working Time Regulations 1998, or, he received commission that happened to ‘go live’ during the time he as on holiday.  He did not have the opportunity to earn commission whilst he was on holiday as he did not make any sales.  This meant there was a disincentive to take annual leave as workers would lose out on commission.

His claim was backed by Unison and after a referral to the Court of Justice of the European Union, the Employment Tribunal held that it was permissible to interpret domestic legislation so that it conformed to EU legislation.  The employer British Gas appealed against that decision and as expected the appeal was dismissed.

This now means that besides holiday pay being calculated on pay that is normally received (including for example regular overtime) it must also include commission.

Other issues such as the reference period over which the commission is calculated remain unclear.

Employers should consider their position, review their contracts and seek advice if required.

Contact Dean Wilson LLP’s employment law specialist Victoria Wright at 01273 249277 or via email: vjw@deanwilson.co.uk