• Holiday Pay Should Include Commission

    Judgment of the Employment Tribunal in Lock v British Gas (25 March 2015)

    The Court of Justice of the European Union is clear on the principle behind the calculation of holiday pay which is that:

    “The purpose of providing payment for that leave is to put the worker, during such leave, in a position which is, as regards his salary, comparable to periods of work”

    In the Lock case, heard by the Leicester Employment Tribunal, after its European holiday the question was whether sales commission should be included in the calculation of holiday pay under the Regulations. In a Reserved Judgment handed down on 25 March 2015, the Employment Judge had little difficulty concluding that it should.

    This gives effect to the Judgment of the CJEU and reinforces the obligation on employers to include commission in their holiday pay calculations.

    What this decision does not answer however is:

    Where a commission scheme is deliberately structured to compensate employees for annual leave is there still a requirement to include commission in the holiday pay calculations under the Regulations?

    If regard must be had to commission normally received when calculating holiday pay, what is the correct reference period for calculating the average commission to be included in a week’s pay?

    The Tribunal stated that those points will be considered at a later date.

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