The recent European Court decision in Lock on holiday pay has interpreted the annual leave remuneration conditions under the Working Time Directive.  In particular, in accordance with the judgment, any variable pay or commissions regularly paid to employees must be taken into account for the calculation of their total remuneration during their annual leave if that remuneration is related to the number of sales made while at work.

Spanish legal framework

Article 38 of Spanish Workers' Statute (WS) regulates employees' holiday leave and establishes that any employee is entitled to certain periods of annual paid leave.  However, this brief regulation has been clearly insufficient to address disputes between employers and employees regarding the composition of holiday pay, and legal conflicts proliferated in the early days after the approval of the WS.

For this reason, Spanish case law has already been applying the Working Time Directive in a complementary way since the 1990s.  In this regard, it is worth mentioning the important Supreme Court decision of 17 December 1996 construing the Directive and article 38 WS, in which the Court held that in general, employees' commission payments are part of the ordinary compensation structure of the employees, and, as a consequence, these variable pay concepts must be taken into account to calculate the average holiday pay.  This doctrine has also been applied by other lower Spanish courts and tribunals to the present day.

Therefore, Spanish case law unanimously resolved employees' holiday pay claims by finding that only the extraordinary allowances and commissions which had been paid due to extraordinary or one-off work can be excluded from holiday pay calculations.  Additionally, other payments not linked to employees' salary, such as travelling expenses or other expenses compensation, could also be deducted from holiday pay calculations.

Annual leave pay calculation

As explained, Spanish case law on holiday payment has established that annual leave payment must be based on the employees' average "ordinary remuneration" including, if applicable, any commissions or variable pay they may be entitled to.  In this respect, Spanish case law has established that the ordinary character of remuneration should be based on each employee's particular conditions on a case by case basis (taking into account regularly paid salary supplements for quality or quantity of work, such as commissions).

In this way, Spanish case law had been applying the legal doctrine now defined by European Court decision in Lock.  However, surprisingly enough, the press is greeting this judgment with astonishment and suggesting that it could produce an avalanche of claims, demonstrating that despite being an established case law principle, it was unknown to most of the population.

In conclusion, the European Court decision has not produced any substantial doctrinal or jurisprudential change in Spain, but certainly it has given greater visibility to the legal criteria.