Commission and holiday pay ruling


The Court of Appeal has confirmed that holiday pay calculations should include a representative amount of commission-based pay.


In the case of British Gas v Lock, Lock, a sales consultant for British Gas, brought an employment tribunal claim for outstanding holiday pay when this was calculated according to his basic salary without taking into account the commission he would usually earn.


The Court of Appeal upheld a decision issued by the Employment Appeal Tribunal in February 2016, finding that normal remuneration earned over a suitable reference period should be taken into account when determining holiday pay.


This maintains the decision reached by the European Court of Justice (ECJ), which found that the Working Time Regulations allow Lock to have his holiday pay calculated based on his normal remuneration, which includes taking into account commission payments.


Andrew Granger, partner in the employment, pensions and mobility group at Taylor Wessing, said: “The court has, as expected, confirmed that workers are entitled to have part of their holiday pay calculated by reference to their normal contractual remuneration measured over a suitable reference period, and that in Mr Lock’s case this means that his average commission earnings over a 12-week period are to be taken into account. But the court did not throw much light on how normal remuneration and the requisite reference period are to be calculated in other cases."


https://www.employeebenefits.co.uk/issues/october-online-2016/british-gas-court-of-appeal-decision-confirms-inclusion-of-commission-in-holiday-pay