The case: We have now received the eagerly antici- pated Tribunal judgment in the Lock v British Gas case. In this case, Mr Lock, a sales consultant with British Gas, brought a claim to the Tribunal for holiday pay on the basis that it did not include what he would have earned from commission had he been at work. The Tribunal felt unable to decide whether EU law, from which the UK Working Time Regulations are derived, requires pay while on annual leave to include commission payments, and they referred the case to the European Court of Justice (ECJ). The ECJ concluded that Mr Lock’s commission was directly linked to the work he carried out, and so must be taken into account when calculating holiday pay. However, they left it to the UK Tribunal to decide whether the UK law could be construed consistently with the EU position.
Last week, the Tribunal ruled that the UK working time law could be construed in accordance with the EU directive and that “commission or similar pay- ments” must be included when calculating holiday pay. In doing this, the Tribunal added words into the Working Time Regulations to treat employees who receive commission in the same way as employees whose pay varies with the amount of work they do. This, in turn, means that the reference period for calculating the average pay will be the 12 week period preceding the holiday in question (it had been thought that a longer period might be applied).
The impact: A 12 week rolling period could be difficult to administer for employers with large workforces who earn commission, and it is also unlikely to be representative in a business where commission f luctuates during the year. Another concern is whether the concept of commission could be extended to include bonuses, particularly those tied closely to the volume or value of business produced by an employee. Given that the two year cap on backdated claims takes effect on 1 July 2015, the next few months will be ones to watch.
Lock v British Gas Trading Ltd and another ET/1900503/2012