Employment Appeals Tribunal Upholds Holiday Pay Decision

Mar 08, 2016
The decision was handed down by the Employment Appeal Tribunal (EAT) on 22 February 2016 in respect of whether the Working Time Regulations 1998 and Employment Rights Act 1996 (domestic legislation) could be interpreted in compliance with the Working Time Directive. 

The Working Time Directive provides the right to paid leave, such leave to be paid at the rate of a week’s pay in respect of each week of annual leave. The question in Lock v British Gas was whether a week’s pay ought to include payment for commission which could have been generated had the employee not been on annual leave. 

Mr Lock was employed by British Gas and earned a basic salary plus commission, such commission greatly exceeding his basic pay. Mr Lock brought a claim against his employer for unlawful deduction from wages on the basis that he was paid basic pay whilst on annual leave and no provision was made for the fact that he was unable to generate commission during this time. 

The first instance Employment Tribunal held that results-based commission must be included when calculating holiday pay and that domestic legislation could be read in accordance with the Working Time Directive to achieve this result.

The EAT held in the 2015 case of Bear Scotland & Others v Fulton & Others that domestic legislation could be interpreted in line with the Working Time Directive in respect of non-guaranteed overtime, requiring that an element of non-guaranteed overtime be paid to employees who routinely performed such overtime, when on annual leave. 

British Gas appealed the judgment in Lock v British Gas arguing that the EAT was not bound by its own decision in Bear Scotland & Others v Fulton and that an additional commission element need not be paid for annual leave. The EAT dismissed the appeal, following the earlier decision of Bear Scotland and holding that words could be implied into domestic legislation to bring it into line with the Working Time.

As such, Mr Lock was entitled to a payment of commission during his period of annual leave since that was his "week's pay". 

Darren Hayward

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Darren Hayward

Darren joined Nockolds in 2003 and is the firm’s Managing Partner and Partner in charge of our Employment Law Team. 
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