Mr Lock was a salesman on a basic salary with variable commission paid in arrears. Mr Lock could not earn commission whilst on annual leave and therefore would lose income the following month when he took holiday. He issued a claim against his employer for unlawful deduction of wages in relation to under payments of holiday pay.
The case was referred to the European Court of Justice (“ECJ”) in 2014 and the ECJ clarified that when calculating holiday pay, Member States must ensure that a worker taking leave is paid by reference to their “normal remuneration” and this would include commission payments that the worker would have earned if at work. The ECJ stayed silent on how this should be implemented by Member States.
The Court of Appeal’s decision last Friday confirmed the Employment Appeal Tribunal’s decision in February 2016, that the Working Time Regulations 1998 can and should be interpreted to reflect the EU Law position.
It is even higher UK authority that, where applicable, holiday pay should include a reflection of commission that would have been earned by a worker during their period of holiday.
Unfortunately, the Court of Appeal did not comment on how this should be calculated and so that remains a matter on which there is very little guidance.