Lock –v- British Gas Plc 2016
The Employment Appeal Tribunal (EAT) has found in favour of the Employee – Mr Lock – and has now ruled that commission payments must be included in the calculation of a worker’s holiday pay. This follows a previous ruling on the subject by the European Court of Justice.
In this case Mr Lock was employed by British Gas and his earned a basic salary plus commissions which were dependent on the number of sales that he achieved. When Mr Lock took annual leave Mr Lock he only received pay based on his basic salary. This caused Mr Lock to initiate legal proceedings in order to recover commission payments that he would normally receive, during his holidays.
The law in the United Kingdom emanates from the Working Time Regulations 1998 and the Employment Rights Act 1996 and provides that workers must receive at least four weeks’ paid annual leave per annum. Unfortunately it is not clear how these payments are to be calculated.
There has also been additional case law for example the Bear Scotland EAT authority which confirmed that holiday pay should be calculated to include non-guaranteed overtime, and this set the scene for this case as well in relation to commission payments.
Following this decision it is clear that commission payments must now be calculated and included in all holiday pay. It is not however clear as to how commission payments are to be calculated. It is therefore important that all Employers who have a commission scheme now include such payments in any calculation of holiday pay. If they do not then they open themselves up to a risk of Employment Tribunal claims for unlawful deduction of wages (Section 13 Employment Rights Act 1996).
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