Holiday Pay

Further updates in relation to holiday pay in the Employment Tribunals.

The European Court of Justice (‘ECJ’) had a referral from the Leicester Employment Tribunal regarding a dispute between an employee called Mr Lock and British Gas.

Mr Lock (and other employees) were involved in sales, so had commission on sales as well as their basic salary. Such commission often exceeded what they received in basic salary.

However, when they took holiday – they only received their basic salary. This hadn’t been a problem – since the commission they had earned prior to their holiday was often paid at that time as well.

The problem was that as they were on holiday – they could not earn commission (make sales) – so further down the line they had their basic salary as no commission was coming in from the period they were on annual leave.

They felt this was unfair, and took British Gas to the Employment Tribunal, arguing that commission should be taken in to account when working out their holiday pay – so in other words, they didn’t receive just basic pay during holidays but a percentage as well of what they would have earned in commission had they not taken holiday

The Tribunal agreed. They referred the interpretation of the Working Time Regulations to the ECJ for clarification.

The ECJ have confirmed that commission does form part of salary and therefore has to be included within the holiday pay entitlement.

Furthermore, this entitlement is limited to 4 weeks holiday – which is the EU Working Time Directive limit of 20 days including bank holidays. . In the UK – we have the Working Time Regulations which permits the employer, if they wish, to allow 28 days holiday including bank holidays. The ECJ have therefore directed that the commission part only is to be included within the 4 week holiday entitlement, not the extra 1.4 weeks allowed under UK law for holidays.

So – ensure are the employer who complies with UK employment law – ask the experts at Quality Solicitors Dunn and Baker – for whom business matters.

Kathy Trist
Solicitor – Litigation Team
Tel: 01392 285 015
Email: k.trist@dunnandbaker.co.uk

Lizzy Bowman
Solicitor – Litigation Team
Tel:01392 285 033
Email: l.bowman@dunnandbaker.co.uk