ECJ Ruling: Holiday pay must be calculated based on all elements of normal earnings.
A new case (British Gas v Lock) has confirmed that holiday pay calculations should take account of commission earnings as well as overtime.
Mr. Lock, a salesman for British Gas received a basic salary plus commission on a results based. The commission element of his pay amounted to approximately 60% of his overall pay. British Gas included only the basic pay element in any holiday pay and said that they were complying with English law in doing so and therefore in the periods following holiday the employee would receive less as they had not been working and therefore would not have earned any commission. The European Court of Justice confirmed that from a European Law perspective, the sort of commission that the employee was receiving should be included for holiday pay purposes. The Employment Tribunal confirmed that this should be the case as far as English law was concerned too but only for the first 20 days of holiday in each year.
Although legislation was passed to limit the potential for “back dated” claims for underpayment of holiday pay, employees who believe that they may be owed holiday pay can still submit their claims to the Employment Tribunal. If you require further information or would like to discuss this in more detail to see whether it affects you and your business, please contact us.
Blog entry by: Trina Nunn.