{"id":2985,"date":"2017-05-12T19:15:14","date_gmt":"2017-05-12T19:15:14","guid":{"rendered":"https:\/\/www.riaabarkergillette.com\/uk\/?p=2985"},"modified":"2024-11-19T20:31:55","modified_gmt":"2024-11-19T20:31:55","slug":"calculating-holiday-pay-change-horizon","status":"publish","type":"post","link":"https:\/\/www.riaabarkergillette.com\/uk\/calculating-holiday-pay-change-horizon\/","title":{"rendered":"Calculating holiday pay \u2013 change on the horizon?"},"content":{"rendered":"\n

Last year the Court of Appeal in British Gas v Lock<\/a> held that employers must consider commission payments when calculating holiday pay under the Working Time Directive (WTD<\/a>). However, the Court remained silent on whether the same rule would apply in other cases, for example, where employees receive a single, results-based commission or annual bonus.<\/p>\n\n\n\n

Summary of the case<\/h4>\n\n\n\n

Mr Lock was a sales consultant for British Gas, and was paid a commission which greatly exceeded his basic salary. While on holiday, he was paid at the rate of his basic salary \u2013 and claimed this was an unauthorised deduction from his wages. An Employment Tribunal and the Employment Appeal Tribunal (EAT) agreed with him, finding that under the WTD, \u2018normal remuneration\u2019 included his commission and should be included in his holiday pay.<\/p>\n\n\n\n

How could the ruling affect UK employers?<\/h4>\n\n\n\n

The ruling sets a precedent for commission to be included in holiday pay if it is intrinsically linked to the performance of tasks in an employee or worker\u2019s employment contract.<\/p>\n\n\n\n

While the calculation is left up to national courts to determine under national law, it must be based on the average commission earned \u201cover a reference period which is considered to be representative\u201d. When writing this article, the Tribunal had not considered the appropriate reference period to be applied to calculate Mr Lock\u2019s commission. Although, it was likely to be based on average earnings over the 12-week period before holiday is taken.<\/p>\n\n\n\n

In light of Lock and other recent case law, employers are advised to review their holiday pay calculations to ensure they comply with the changes. As it\u2019s unclear how such payments should be calculated, tribunals will likely approach the issue on a case-by-case basis.<\/p>\n\n\n\n

In short<\/h4>\n\n\n\n
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\u201cCOMMISSION MUST BE INCLUDED IN HOLIDAY PAY IF IT IS INTRINSICALLY LINKED TO THE PERFORMANCE OF TASKS IN AN EMPLOYEE\u2019S OR WORKER\u2019S EMPLOYMENT CONTRACT\u201d<\/p>\n<\/blockquote>\n\n\n\n