Commission accounted, on average, for some 60% of the monthly pay of the claimant in Lock v British Gas Trading Ltd, a sales consultant. He took three weeks' annual leave at the end of 2011; during this time he did not earn any commission as he was not making any sales and, as a result, his salary in the months following was reduced. He did receive a commission payment while he was on holiday, but this was for sales he had made earlier in the year which he would have received in any event, whether or not he had been on holiday.
He then decided to ask for, in effect, a "top-up" to reflect later losses of commission, in the form of a claim for unpaid holiday pay. The Employment Tribunal referred the claim to the European Court; the UK's Working Time regulations do not make it clear precisely what must be included in holiday pay in this sort of case and there has been a conflict between a UK Court of Appeal decision (suggesting that only basic pay should be taken into account) and a more recent European case about airline pilots' holiday pay that had ruled that any pay "intrinsically linked" to performance of the worker's job must be included.
The European Court has traditionally been fiercely protective of annual leave and generally looks to stop any practice that might dissuade employees from taking it. In this case the Advocate - General's suggestion to the Court is to reject the employer's arguments that their commission policy is structured to take account of holidays (both in terms of the targets set for sales staff and the rate of commission paid) and to rule that the employee should get holiday pay which includes basic pay, commission actually payable during that period and a proportion of commission (averaged over a period of, say,12 months) to reflect what he would have earned had he been working rather than on leave.
The European Court does not have to follow this Opinion but, more often than not, it does (although, if so, the ruling would apply only to the minimum four weeks' annual leave under the European Directive). A cautious approach would be to proceed on the basis that commission (and any other regularly earned variable pay elements, such as shift allowances for example) ought to be factored into holiday pay.