UK: Holiday Pay Cases: Where Are We Now?

Last Updated: 27 April 2016
Article by Clare Gilroy-Scott

The Employment tribunals continue to consider a number of cases concerning the inclusion of overtime and commission payments in holiday pay, as well as the entitlement to carried over leave as a result of long-term sickness or where a worker has otherwise been unable to take it. Are we any closer to a resolution? Unfortunately the position remains unhelpfully unclear for employers who do not want to fall foul of the requirements or face large backdated claims.

In this article we review the latest tribunal decisions and consider what employers could be doing in the meantime.

Overtime pay and back-dated claims – Bear Scotland cases

By way of reminder, the Bear Scotland consolidated cases considered the question of whether holiday pay should include overtime pay (in respect of the minimum four weeks' statutory annual leave required by the Working Time Directive (WTD), rather than the additional 1.6 weeks' leave granted by the amended Working Time Regulations(WTR)). The EAT decision in November 2014 was ground-breaking, the practical effect being that overtime should be paid if it is normally received by the worker and is a payment directly linked to the work.

To qualify as "normal" the payment must have been made for a sufficient period. This may be easily identified where there is a settled pattern of work but where there is no settled pattern of work, the amount should be determined using an average over a reference period (as determined by national legislation). Unfortunately there has been no guidance from the tribunal as to how long a period of payment would be "sufficient", nor whether the 12 week reference period which is currently set out in the Employment Rights Act to determine a "week's pay" in certain circumstances is the appropriate period.

There must also be an intrinsic or direct link between the payment and the work that the worker is required to carry out. Guaranteed overtime is therefore caught, as is non-guaranteed where the worker is obliged to work overtime if requested. What remains unclear is the position on voluntary overtime.

In August 2015 the Bear Scotland cases returned to the employment tribunal to consider the claimants' individual circumstances. The tribunal dismissed the claims. The claimants have sought permission to appeal and the hearing was listed in the Scottish EAT on 13 April 2016.

Commission and holiday pay – Lock v British Gas

The Lock case considered the question of whether commission payments should be included in the calculation of holiday pay. The ECJ had previously considered Lock and held that it should, again being a payment intrinsically linked to the worker's performance.

The worker in this case, Mr Lock, received commission earned on previous sales if paid during periods of absence. He claimed that he was disadvantaged when on leave as he could not earn commission during those periods. Again we have mention of calculation over a reference period, but no indication as to the appropriate length of that reference period, other than that it should be representative.

In February 2016 the EAT dismissed British Gas's appeal. The WTR should be interpreted so as to conform with the requirements of EU law and include results-based commission (in statutory holiday pay derived from the WTD), in accordance with Bear Scotland. The Supreme Court will hear a further appeal in Lock by 17 February 2017.

The Lock case will then go back to the tribunal to decide the correct reference period for calculating the commission element of holiday pay.

Holiday pay and employment status: King v The Sash Window Workshop Ltd

The King case is a reminder that workers and not just employees benefit from the entitlement to paid holiday under the Working Time Regulations.

On 9th February, the Court of Appeal considered the question of whether a worker who is denied payment for his leave whilst working is entitled to a payment in lieu on termination for untaken leave during the course of the engagement, in this case going back to 1999.

Background: Mr King treated as self-employed

Mr King worked full-time for The Sash Window Workshop Ltd (SWWL) as a salesman, paid entirely on commission, for 13 years. He took varying amounts of holiday each year but was not paid whilst on holiday. This was because SWWL considered him to be self-employed and not entitled to paid holiday.

Mr King's contract was terminated upon his reaching 65 in October 2012. In 2013 Mr King won claims for age discrimination and holiday pay in the Employment Tribunal (ET), the latter claim on the basis that he was a "worker" and not, in fact, self-employed.

Mr King submitted that the fact he was not paid for holiday meant he was deterred from taking his full entitlement throughout his 13 years of working for SWWL. He was successful in full with all three categories of holiday pay claimed and received the following awards:

  • Holiday Pay 1 – payment representing the amount of holiday accrued but untaken at the date of termination for the final (incomplete) leave year;
  • Holiday Pay 2 – payment for unpaid leave requested and taken in previous years, claimed as a series of unlawful deductions from wages; and
  • Holiday Pay 3 – payment in lieu of the accrued but untaken leave throughout the whole period of Mr King's engagement in respect of which no request for leave was made. The ET saw no difference between a worker being "unable" to take paid leave due to sickness and a worker being denied paid leave.

Mr King's claim stretches back to 1999, because the right to bring a claim for a payment in lieu can only arise on termination. Mr King presented his claim within 3 months of the termination.

Employment Appeal Tribunal: Appeal by SWWL

SWWL made no challenge to the ET awards for Holiday Pay 1 and 2 but appealed in respect of Holiday Pay 3. This was the untaken leave which SWWL argued Mr King was not entitled to carry over each year. The EAT held that it may be possible for a worker to claim that holiday is carried over into the next year of annual leave and/or for a payment on termination of their employment in lieu of that untaken leave entitlement, in circumstances where they are unable to take their holiday for reasons beyond their control which are unrelated to sickness (widening the scope of previous cases which had allowed such carry over where there had been long-term sickness).

The remitted Mr King's claim back to the ET for reconsideration as to whether there could be a specific finding of fact that he was prevented "for reasons beyond his control" from taking leave.

Court of Appeal: Appeal by Mr King

The Court of Appeal allowed Mr King's appeal against the EAT decision and heard the case in February 2016. Judgment has been reserved.

Mr King is represented by James Williams of Henderson Chambers, instructed by Clare Gilroy-Scott of Goodman Derrick LLP.

Despite the uncertainty, what can employers do now?

  • Review your workforce. Do you have workers who are not receiving paid leave?
  • Review the annual leave provisions in your contractual terms with employee and workers.

    • Are your contractual terms relating to carry-over sufficiently clear in circumstances where the leave has not been taken due to sickness or other reasons beyond the control of the worker?
    • Are your contractual terms relating to pay for leave sufficiently clear?
  • Assess the number of workers who receive overtime pay and commission pay.

    • Do you currently factor in overtime and commission in holiday pay for employees and workers?
    • Are the provisions in your contractual terms with those employee and workers sufficiently clear in terms of payment for leave?
    • Consider other payments, their frequency and whether they are intrinsically linked to the work.

Do you want to find out more about holiday pay?

How to deal with holiday pay in the wake of these decisions will be covered by Clare Gilroy-Scott at two legal breakfast briefings in May:

11 May 2016: Employment Law Case Update click here for details.

19 May 2016: Recruitment Sector Legal Breakfast Briefing click here for details.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.