Commission should be included in holiday pay calculations confirms the Employment Appeal Tribunal
We recently reported on a decision in the Employment Tribunal in the case of Mr Lock v British Gas, which held that where an employee is paid via commission (in whole or in part) their holiday pay should include an element which takes into account that commission.
British Gas, however, appealed the outcome and the Employment Appeal Tribunal (“EAT”) passed Judgment on the appeal earlier this week. The case centred around Mr Lock, who worked for British Gas. His salary package was broken down as roughly 40% basic pay and 60% commission. Mr Lock was unable to earn commission during his holidays as he was not working. He complained to the Tribunal as he believed that this was unfair and operated to deter him from taking his holiday. The Tribunal agreed with him.
Earlier this week the EAT upheld the Tribunal’s decision that holiday pay should include commission if this is part of a workers’ normal pay. UNISON general secretary Dave Prentis said “This is a victory for workers and victory towards fair pay in this country and beyond”.
The decision means that workers’ pay for annual leave periods must include commission, as well as basic pay, if this is what they are normally paid. The case comes quickly on the back of the EAT decision in Bear Scotland v Fulton which set out that overtime pay should in certain circumstances also be included in a workers’ pay whilst on annual leave. Unhelpfully, neither case sets out how employers should calculate what the value of the commission/overtime should be, so whilst employers can now be (relatively) certain that commission and overtime should be considered as part of holiday pay, it is not clear how payment of that should be made.
These recent cases throw up a number of practical complications for employers on many different fronts and certainly could cause headaches when calculating holiday pay. There are many different ways to deal with these implications and our team of expert employment lawyers can work with you to provide practical solutions and advice on the current position tailored to your specific business.
For more information on your options in respect of holiday pay please do not hesitate to call any member of the Employment Team on 01603 281153.
Note: the content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any particular circumstance.