Commissioning a Holiday
Regular readers may remember that around this time last year a decision by the European Court of Justice (CJEU) was sent back to the UK for consideration. It related to the loss of ability to earn commission whilst on leave. In this case (Lock vs British Gas) the Employment Tribunal was asked to consider whether the UK Regulations could allow for the findings of the CJEU. The Judge had decided that such cases should be treated in the same way as an individual with a variable amount of pay and as such should be calculated in the same way (i.e. averaged over the 12 weeks prior to the leave being taken.)
The case went to the Employment Appeal Tribunal who agreed that commission should indeed be included in the averaging calculation. Previously workers who earned commission would not see this reflected in their holiday pay, which Lock claimed was unfair. Employees earning commission would only receive paid holiday leave based on their basic pay which was less than normal pay and created a disincentive to take annual leave.
This means that as well as taking into account non-guaranteed overtime payments when calculating pay for the basic four week holiday entitlement under Working Time Regulations, employers now need to include commission payments.
However, this latest decision may not be the end of the saga as employer British Gas has requested permission to take the case to the Court of Appeal to gain a definitive ruling. In the meantime, employers would be wise to consider amending their payment arrangements to minimise the potential liabilities involved. If you need advice on this matter, please get in touch.
Posted on 19 Nov 2016