The Supreme Court has refused permission for British Gas to appeal against an important ruling that the calculation of holiday pay should include results-based commission.

In 2016 the Court of Appeal upheld the Employment Appeal Tribunal's decision in British Gas Trading Ltd v Lock (for further details please see "Court of Appeal confirms that holiday pay should include commission"). In essence, the court ruled that the Working Time Regulations 1998 could be interpreted compatibly with the EU Working Time Directive and case law of the European Court of Justice to ensure that contractual results-based commission is taken into account for the purposes of calculating holiday pay.

The Supreme Court has now rejected British Gas' application to appeal against the Court of Appeal's judgment; this issue of principle is therefore finalised.

However, this is not the end of the road for Lock. The key issues of whether Mr Lock was underpaid and by how much are yet to be decided, as well as what the appropriate reference period for the calculation should be. The Employment Tribunal will also need to consider whether the commission scheme operated in such a way that it effectively compensated for the period of annual leave, even if the arrangement was not in accordance with the legal provisions about how and when holiday pay should be paid.

It has been reported that the Employment Tribunal will decide on these outstanding matters this month. Only after a decision is given – and any subsequent appeals resolved – will employers potentially have greater clarity about how to calculate holiday pay for those earning results-based commission.

For further information on this topic please contact Anna Sella at Lewis Silkin by telephone (+44 20 7074 8000?) or email (anna.sella@lewissilkin.com). The Lewis Silkin website can be accessed at www.lewissilkin.com.

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