There has been some speculation about holiday pay and how it should be calculated with results-based commission. A recent case has helped shed some light on what EU regulations are currently in place and how they may, or may not, change during Brexit.
The case of British Gas v Lock
Mr Lock, a salesman for British Gas, was paid a monthly commission on top of his basic salary that fluctuated based on his sales. When absent on holiday leave, his pay did not reflect any of the commission he would have earned. He issued a claim that British Gas had failed to properly calculate his holiday pay and owed him money.
The European Court of Justice agreed with the ET that since the commission is directly linked to the work Mr Lock carries out, it should be taken into account when calculating the amount owed for holiday pay. The case was returned to the ET for this ruling to then be applied in UK law. For this to happen, the ET needed to add an extra subsection to the Working Time Regulations 1988
What does this mean for the future?
This case has shown that representative results-based commission and non-guaranteed overtime must be taken into account in the calculation of holiday pay for the first 4 weeks of holiday under the Working Time Regulations. However, the issue of how to calculate this has still been left unanswered.
The government will be, in theory, able to change this EU requirement law after the UK leaves the EU. But, it is likely that this holiday pay calculation will stay in place due to Theresa May’s confirmation that workers’ rights will not be diminished under a future Tory government.
In a nutshell…
Currently when calculating an employee’s holiday pay entitlement, regarding the first four weeks, results-based commission must be included in employer calculations. Moving forwards, employees can expect these rules to stay. How this commission pay entitlement will be calculated, however, is something we are still awaiting guidance on.
For more information, visit http://79.170.40.162/enlightenhr.com or contact Alison Benney:
alison@enlightenhr.com
Tel: 01803 469466
Mobile: 07967221595
