The issue

Mr Lock was paid a basic salary and commission based on the sales he achieved. The European Court of Justice considered whether the Working Time Directive requires that holiday pay should include commission and, if so, how to calculate it.

The ruling

Calculation of a worker's holiday pay should include commission payments where these payments are intrinsically linked to the performance of the tasks the worker is required to carry out under his contract. Failure to take these payments into account would place the worker at a financial disadvantage, as the worker would be unable to generate commission during time spent on holiday. This could deter the worker from taking annual leave and is therefore contrary to the objective of the Working Time Directive.

Comment

The Employment Tribunal will now need to consider how to calculate the commission due to Mr Lock during any periods of annual leave. It is likely the Tribunal will decide that employers need to analyse a worker's remuneration over a specified reference period. Although the Advocate General suggested a 12-month reference period, the Tribunal may favour a 12-week reference period, which is consistent with the reference periods specified by UK law for workers with no normal working hours.

Lock v. British Gas Trading Ltd C-539/12. A link to the case is here.