law
Holiday pay – commission pay strikes back
So, in a saga nearly as long running as Star Wars, the case of British Gas v Lock has given new hope to employees when commission is not earned as a consequence of an employee taking holiday
By way of background, for those who may have missed the earlier episodes, Lock, our brave hero and salesman, was paid a basic salary together with a commission, which in his case amounted to about 60% of his total earnings. Lock’s commission depended on the sales achieved. He could not earn commission whilst on holiday, and therefore lost income by taking it. He brought a claim for his ‘lost’ holiday pay.
Being our brave hero, Lock fought his case all the way to the European Court of Justice. The question the ECJ had to answer was whether commission should be included
in the term “week’s pay” used in the Working Time Regulations 1998. The ECJ ruled that since Lock’s commission should have been taken into account when calculating holiday pay.
The case returned to the Court of Appeal for determination, and announced its verdict on Friday, October 7, and, unsurprisingly, the principles continued to apply that Lock could receive his commission pay that he lost out on when taking holiday.
In recent months we have advised both employers and employee in relation to their obligations and rights under commission schemes. The employer is often trying to do
the best for their employees without recognising the consequence of appropriately remunerating employees during holiday pay periods. Employees are often only trying to get the pay they actually feel that they deserve.
This line of authorities remains significant to all employers that run commission schemes. Employers should review how their employees are paid for holiday, particularly if there is a commission scheme in place.
Thankfully, even though an appeal to the Supreme Court is likely, hopefully this saga is coming to a conclusion.
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BLANDY & BLANDY sol ic i tors
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businessmag.co.uk
THE BUSINESS MAGAZINE – THAMES VALLEY – NOVEMBER 2016
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