Newsflash: Holiday pay and commission

holiday pay - deck chairWhat do we already know?

In our March 2016 Newsletter Case update (1): Holiday pay & commission we updated you that the EAT had decided in the case of Lock v British Gas that sums earned by way of commission should be included in the calculation of holiday pay for the first four weeks of an employee’s holiday under Regulation 13 of the Working Time Regulations 1998 (WTR) and the WTR should be interpreted to conform with the requirements of EU law.

We also updated you that British Gas had been granted leave to appeal against the above decision but that it was likely that the Court of Appeal would confirm the EAT’s decision.

What’s new?

The Court of Appeal has indeed upheld the EAT’s decision that sums earned by way of commission should be included in the calculation of holiday pay for the first four weeks of an employee’s holiday under Regulation 13 of the Working Time Regulations 1998 (WTR) and the WTR should be interpreted to conform with the requirements of EU law.

However, the court expressly opted out of addressing the question of the appropriate reference period to calculate the commission element of statutory holiday pay. It is understood that British Gas intends to apply for leave to appeal to the Supreme Court. It is hoped that the Supreme Court will take the opportunity to provide greater clarity for employers on this issue.

The Court of Appeal’s decision is available here.

Given the importance of the decision we will cover this in further detail in our October 2016 Newsletter so watch this space…