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EAT Confirms That Commission Should Be Included When Calculating Holiday Pay

EAT Confirms That Commission Should Be Included When Calculating Holiday Pay

In 2014, we reported on the long awaited decision of the European Court in Lock v British Gas ( hyperlink to http://www.burnesspaull.com/blog/2014/05/are-employers-facing-holiday-pa... ), in which it was determined that, as a matter of European law, holiday pay must include commission earned under contractual arrangements. 
The case was sent back to an Employment Tribunal to determine whether domestic law could or should be interpreted in such a way as to comply with the European Court’s decision. The Employment Tribunal held that it could, and found in Mr. Lock’s favour. In doing so, the Employment Tribunal followed the approach taken in Bear Scotland v Fulton, in which the EAT ruled that domestic law could and should be interpreted to conform with European law, by requiring that non-guaranteed overtime payments be included when calculating holiday pay. 
British Gas appealed, arguing that the decision in Bear Scotland was wrong and, in any event, that it was not relevant to the issue of commission payments. The EAT rejected these submissions, and dismissed the appeal. 
So, for the moment at least, the clear message is that commission payments should be included when calculating holiday pay. That being said, British Gas has requested permission to appeal this latest decision to the Court of Appeal, and we expect that most holiday pay cases will remain stayed or sisted until a definitive ruling is released. 
If you have any questions or wish to speak to a member of the team about how this decision might affect your organisation, please contact us. 
Rachel McKay
Solicitor

In 2014, we reported on the long awaited decision of the European Court in Lock v British Gas, in which it was determined that, as a matter of European law, holiday pay must include commission earned under contractual arrangements. 

The case was sent back to an Employment Tribunal to determine whether domestic law could or should be interpreted in such a way as to comply with the European Court’s decision. The Employment Tribunal held that it could, and found in Mr. Lock’s favour. In doing so, the Employment Tribunal followed the approach taken in Bear Scotland v Fulton, in which the EAT ruled that domestic law could and should be interpreted to conform with European law, by requiring that non-guaranteed overtime payments be included when calculating holiday pay.

British Gas appealed, arguing that the decision in Bear Scotland was wrong and, in any event, that it was not relevant to the issue of commission payments. The EAT rejected these submissions, and dismissed the appeal. 

So, for the moment at least, the clear message is that commission payments should be included when calculating holiday pay. That being said, British Gas has requested permission to appeal this latest decision to the Court of Appeal, and we expect that most holiday pay cases will remain stayed or sisted until a definitive ruling is released. 

If you have any questions or wish to speak to a member of the team about how this decision might affect your organisation, please contact us. 

Rachel McKay

Solicitor

LChalmers