Insight: Lock v. British Gas 2.0 – employers must include commission in holiday pay

What triggered the case?
Mr Lock was employed by British Gas as a salesman. His remuneration package included a basic salary plus commission, which was calculated based on the number and type of contracts he secured from customers. When Mr Lock went on holiday, British Gas would only pay him basic pay, which was significantly less than his usual salary.
Mr Lock issued a claim against British Gas in 2012 and claimed that his holiday pay should include a sum representing the commission he would normally earn whilst at work.
What is the law?
The European Working Time Directive (EUD) provides that workers must have the right to at least four weeks’ paid annual leave. However, it does not specify how holiday pay should be calculated. In the UK, the Working Time Regulations 1998 (WTR) implement the EUD and provide that holiday pay, for a worker who works “normal working hours”, is calculated on basic salary only.
Despite the clear wording of the WTR:
1. in the case of Bear Scotland, the EAT held that the WTR can and should be interpreted to conform with the EUD, and that holiday pay must reflect a worker’s “normal remuneration”, which includes non-guaranteed overtime; and
2. on referral, the ECJ ruled that holiday pay under the EUD includes commission, to ensure workers are not discouraged from taking annual leave.
In Lock, the employment tribunal (ET) adopted the approach taken by the EAT in Bear Scotland and held that holiday pay includes commission . The ET also held that it was necessary to read the WTR in a way that conforms with EU law, even if this requires the tribunal to imply words into the WTR.
British Gas appealed the ET’s decision.
Read the full article here.

Ryan Carthew

About Ryan Carthew

Ryan's clients include publicly listed US and UK based multinationals across a broad range of sectors, including financial services, information technology, media, manufacturing and mining. He specialises in advising clients on complex employment litigation in the High Court and in the Employment Tribunal. An expert strategist, he has an excellent track record of success in pursuing and defending high value litigation.

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