The eagerly-awaited Court of Appeal decision in British Gas
v Lock has now been handed down. The hope for this decision
that it would clarify whether or not holiday pay should take
into account commission that would have been earned but for the
employee's holiday, or, put another way, that it would clarify
whether the Working Time Regulations 1998 can be interpreted in a
way that includes commission in holiday pay; and
that it would set out how to actually calculate the amount of
commission to be included in the holiday pay.
In answer to the first question the Court of Appeal reaffirmed
what has already been known for the last two years: that, subject
to certain conditions, commission is to be included in holiday pay.
With regards to the second question, the court stated that
"nothing in this judgment is intended to answer
[it]". So the position we are now in is that holiday pay
must include commission if the relevant conditions are met, but
that the correct reference period for working out how much
commission to pay is still unclear.
Given that British Gas has indicated that it has around 1,000
potential claims that have been awaiting this decision, and the
cost implications that these would have on its business, there is a
strong likelihood that British Gas will appeal this decision to the
Supreme Court. However, now that the Court of Appeal has ruled on
this issue, employers should, where relevant, ensure that
commission is included in holiday pay – something that could
have huge financial implications for employers with high numbers of
staff working on commission. As to what reference period to use for
calculating the commission to be paid, employers should, with
reference to general practice in the industry within which they
operate, look at their commission scheme and make a sensible
decision. Commentators have suggested that 12 weeks could be an
appropriate reference period, which could be a helpful starting
point for employers.
Despite Brexit, employers will still have to comply with this
decision as, until the UK leaves the EU, UK legislation has to be
interpreted in line with both EU directives and decisions of the
European Court of Justice.
It is worth noting, however, that the application of this
decision is limited to workers (1) with normal working hours; (2)
whose pay does not vary with the amount of work completed; and (3)
whose results-based commission is part of their normal
Dentons is the world's first polycentric global law firm. A
top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm
is committed to challenging the status quo in delivering consistent
and uncompromising quality and value in new and inventive ways.
Driven to provide clients a competitive edge, and connected to the
communities where its clients want to do business, Dentons knows
that understanding local cultures is crucial to successfully
completing a deal, resolving a dispute or solving a business
challenge. Now the world's largest law firm, Dentons'
global team builds agile, tailored solutions to meet the local,
national and global needs of private and public clients of any size
in more than 125 locations serving 50-plus countries.
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The employment landscape is one that is constantly shifting. Employers who fail to keep up with the changes do so at their peril.
We are pleased to invite you to this seminar, designed to help in-house counsel and HR practitioners get to grips with key recent and forthcoming developments in employment, pensions and immigration law and practice and what they mean for your workforce.
The event is going to take place on 26 April 2017 and is addressed to participants of the Berlin Real Estate sector, in particular those dealing with redensification such as investors, developers, brokers, urban housing associations and engineers.
The Court of Appeal has held that where a contract of employment lacks a provision for when notice of termination takes effect, it is effective from when the employee personally takes delivery of the letter containing notice.
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).