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

Book your free initial call

    We endeavour to make an initial response to all enquiries within 24 hours but please be aware that on some occasions due to prior commitments or volume of calls we will not be able to respond in that time frame. We also operate a 48 hour return policy. This return policy means that if we have not responded with 48 hours of your initial enquiry we are unable to do so due to current workloads and we will destroy your data accordingly. This policy ensures you are not left waiting and have the certainty that your data is not compromised. In most instances however we are able to make contact within a 24 hour time frame. Please note our free initial advice service is available to clients at our total discretion and if your case is of a complex nature we may not be able to offer you a free consultation. However in these instances we will advise you what the charge would be for an initial fixed fee consultation.
  • (view our privacy statement)
  • This field is for validation purposes and should be left unchanged.

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