We have previously written about the Bear Scotland case, when the Employment Appeal Tribunal (EAT) decided that overtime may need to be included when calculating an employee’s holiday pay.
The case of Lock -v- British Gas, another EAT case, this time focused on commission payments and annual leave. Mr Lock earned a basic salary and results-based commission. During annual leave, however, he was only paid his basic salary. British Gas effectively argued that, based on the Working Time Regulations 1998 (“WTR”) , being the relevant UK law, this was permissible. European courts had, however, previously decided that result-based commission should be included in order to comply with the Working Time Directive (the European legislation which spawned the WTR). Clearly there was a conflict between the wording of the two pieces of legislation, and the EAT had to consider whether the WTR had properly put into practice the European legislation.
The original Employment Tribunal decision was that such commission should be included when calculating the holiday pay. The EAT, after an appeal by British Gas, agreed with the Tribunal and so rejected the appeal. The EAT agreed with the principles set down in the Bear Scotland case, and decided that results-based commission must be included when calculating holiday pay.
Employees, particularly those whose earnings are closely linked to commission payments, will welcome this decision; employers will feel that this is another potentially expensive headache for them. British Gas have already indicated that they are likely to appeal this decision, so this is almost certainly not the last decision on this matter.
As an aside at this time, the cases referred to above all arose from conflicts between national and European laws. Unravelling the relationship between UK and EU law would be just one of the matters that would have to be dealt with should the UK vote to leave the EU. Many of these decisions may be challenged. For now though, employees will be happy with this recent decision.