The EAT has upheld the decision of the employment tribunal in the leading holiday pay case of Lock v British Gas, confirming that Mr Lock's commission should be included in the calculation of a portion of his holiday pay. However, the position is not yet settled, as a further appeal is likely.
Mr Lock was an energy trader at British Gas and he received variable commission based on sales achieved. Although he received commission for sales made before and after his holiday, he did not earn commission while on annual leave with the result that his pay in the month after his annual leave was lower that would have been the case if he had been at work. He pursued an employment tribunal claim arguing that average commission should have been included in his holiday pay. The question was referred to the CJEU which held that the Working Time Directive (WTD) requires commission to be included in the calculation of holiday pay for the 4 week period of holiday guaranteed by the WTD to the extent that constitutes an element of 'normal' pay.
It then fell to the Employment Tribunal to determine whether the principle endorsed by the CJEU could be read into the UK Working Time Regulations (WTR). Following the earlier EAT decision of Bear Scotland Ltd and others v Fulton and others , which held that regular non-guaranteed overtime should be included in holiday pay calculations, the tribunal concluded that the WTR should be read so as to be consistent with the CJEU's ruling. Accordingly, Mr Lock was entitled to commission payments in respect of his 4 week entitlement to holiday under the WTR. This was achieved by inserting new wording into Regulation 16 of the WTR. The entitlement did not extend to the additional 1.6 weeks of holiday provided for under the WTR, or to any contractual holiday over and above the statutory minimum.
British Gas appealed the decision, arguing that Bear Scotland had wrongly decided that the WTR could be interpreted purposively to give effect to EU law and that, in any event, Bear Scotland need not be followed because it concerned non-guaranteed overtime, which was dealt with by a specific section of the UK legislation that does not apply to commission. The EAT has now dismissed the appeal. It concluded that the Tribunal was correct to follow the approach in Bear Scotland, and that appropriate wording could be read in to the legislation to give effect to the decision of the CJEU. However, as British Gas has asked for permission to appeal, the position may not be settled just yet.