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Does commission need to be included in the calculation of holiday pay?

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Yes said the Employment Appeal Tribunal (EAT) this week in the much awaited case of Lock v British Gas (2016)

Mr Lock was a British Gas Salesperson. His remuneration package consisted of basic pay plus results based commission. When he went on holiday he was paid basic pay only. Mr Lock brought a claim in the Employment Tribunal claiming that his holiday pay should include basic pay and commission. The Employment Tribunal referred the matter to the European Court of Justice (the ECJ). The ECJ concluded that because the commission was directly linked to the work he carried out, it must be taken into account when calculating holiday pay. The case then went back to the Employment Tribunal which then found in Mr Lock’s favour. British Gas appealed to the EAT claiming it would be “judicial vandalism” to follow the ECJ’s conclusion. The EAT dismissed British Gas’ appeal holding commission should be included in the calculation of holiday pay.

However, the reference period employers must use to calculate holiday pay is yet to be clarified. The ECJ said it was for the national courts to decide what period to look at to work out the average amount of commission earned to determine this element of the holiday pay. For further information or for any employment law matters please call us 01604 700099.

Edward Aston
23rd February 2016