Should holiday pay include commission?

18th June 2014

Should holiday pay include commission?

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After months of speculation and anticipation, the Court of Justice of the European Union (CJEU) has decided in British Gas v Lock that where a worker’s pay includes an element of commission, that commission must be taken into account when calculating their holiday pay. It is likely that the consequences of this decision will be enormous.

Mr Lock was a salesman who earned commission based on hours worked and sales achieved. He had brought a holiday pay claim arguing that commission should form part of ‘basic pay’ in holiday pay calculations. He has won. The issue now for the UK Courts and Tribunals is whether it is sufficient to average an employee’s pay over the 12 weeks prior to their holiday in order to reflect the commission they receive.

For the moment, if this affects you, the answer is “yes”. The next issue will be the extent to which this case also applies to other payments such as bonuses and performance related pay.

For any employment advice, contact one of our employment solicitors in Ipswich who will be happy to help on 01473 211121 or email employment@gotelee.co.uk

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