Holiday pay and commission – edging towards a complete answer

13 Apr 2015

The latest Employment Tribunal decision in the Lock v British Gas case about holiday pay and commission is as notable for what it has not decided as for what it did decide.

The Tribunal was charged with working out how to fit the ECJ's decision in Lock v British Gas Trading, that holiday pay be calculated to include commission, into the Working Time Regulations 1998 (WTR). The WTR say that, where a worker has normal working hours, their holiday pay is to be calculated by reference to the pay they receive for those hours, ignoring any variable elements such as commission. Clearly this wouldn’t work for Mr Lock.

So the Tribunal gave effect to the ECJ decision by deciding that it could write a new provision into the WTR to the effect that a worker whose remuneration includes commission (or “similar payments”) should be treated as if their pay varies with the amount of work done.

If this sounds tortuous, it is. But the effect is to compel employers to take commission into account.

What the Tribunal did not decide

Two issues were held over to a further hearing: what is the appropriate reference period, and how to actually quantify what the commission element of holiday pay should be.

In the case of the reference period it seems logical that it should be the 12 weeks prior to the holiday, but we shall see.

Also left open was the question as to whether the use of the words "similar payments" in the Tribunal's amendment to the WTR may give even wider scope to the range of payments to be included when calculating holiday pay.

We will keep you informed about future developments on these issues.

Further reading

Use of statutory demand to make company insolvent suspended until June

Blog, Legal Updates
08/04/2021
Cheraine Williams looks at more temporary Covid-driven measures that will protect businesses and tenants from possible legal action
Read more Read

New guidance issued for valuation of flats and investigating fire safety

Blog, Legal Updates
07/04/2021
Cheraine Williams looks a the current situation facing leaseholders looking to sell or re-finance their property; will new guidance provide clarity?
Read more Read

Government sets new energy targets for domestic and commercial buildings

Blog, Legal Updates
06/04/2021
UK law requires net zero greenhouse gas emissions by 2050; new rules and standards for heating and powering buildings will have a significant impact
Read more Read

Covid regs prevent landlords taking action to recover rent for more than 500 days

Blog, Legal Updates
01/04/2021
Just seven days’ rent arrears used to be enough for commercial landlords to take action; the latest adjustment pushes that out to 554 days
Read more Read
  • Brighton Office

    1 Jubilee Street

    Brighton

    East Sussex

    BN1 1GE

  • Gatwick Office

    Griffin House

    135 High Street

    Crawley

    West Sussex

    RH10 1DQ

  • Guildford Office

    Wonersh House

    The Guildway

    Old Portsmouth Road

    Guildford

    Surrey

    GU3 1LR

  • Horsham Office

    Ridgeland House

    15 Carfax

    Horsham

    West Sussex

    RH12 1DY

  • London Office

    6 New Street Square

    New Fetter Lane

    London

    EC4A 3BF

  • Get in touch