Last week's Court of Appeal decision was the latest pronouncement on whether the Working Time Regulations (the Regulations) can be interpreted in a way that is consistent with the Working Time Directive.
Decisions of the Court of Appeal in 2003 and 2004 found that the Regulations did not require non-guaranteed overtime and commission payments to be reflected in a worker's holiday pay. Later cases in the Court of Justice of the European Union (CJEU) made it clear that under the Working Time Directive holiday pay must match a worker's normal remuneration, including matters such as commission and some overtime payments. The question for the Court of Appeal in British Gas Trading Ltd v Lock was whether the Regulations can be interpreted in a way that reflects the CJEU decisions – or whether the wording of the Regulations and the earlier Court of Appeal decisions makes this impossible.
The Court of Appeal concluded that the real issue is whether the interpretation that the employee was arguing for – that holiday pay should include commission – reflects the grain or "underlying" thrust of the Regulations. The Regulations were intended to implement the Working Time Directive. It can be presumed that the government intended to implement all of the Directive's requirements, even those that only became clear following CJEU decisions. As the thrust of the Regulations was to provide holiday pay in accordance with the requirements of the Working Time Directive, the court should interpret them as entitling workers to have their holiday pay calculated by reference to their normal remuneration.
This seems unlikely to be the last word on the matter however. British Gas has apparently not ruled out an appeal to the Supreme Court. In any event, the Court of Appeal recognised that a number of difficult issues remain outstanding – such as whether an employee who receives a large annual bonus is entitled to have that bonus reflected in his or her holiday pay. The Court of Appeal expressly states that "nothing in this judgement is intended to answer" those questions.