4th November 2014

Holiday pay update: Lock on Lock-down (until February 2015)

Employment lawyers were eagerly awaiting the outcome of the Lock v British Gas Trading Limited case which was due to be heard again by Leicester tribunal office earlier this week.  Unfortunately the hearing has now been postponed until February 2015 and employment lawyers will have to wait until then to hear the next instalment in this saga.

What is the back-story?

Mr Lock was employed as a sales person with British Gas.  He received basic pay and commission payments in terms of a contractual right to receive commission.  His commission represented, on average, over 60% of his monthly pay.  When he was on holiday, Mr Lock received both his basic salary and the commission which had been earned prior to his period of annual leave.  However he did not generate any new commission during his holidays.  Therefore, on his return to work, he would suffer a financial loss as a result of not having earned commission during this annual leave period.

What is the up-to-date situation with this claim?

Mr Lock’s claim was referred all the way up to the European Court of Justice (ECJ).  In summary, the question which was asked of the ECJ was whether Mr Lock should receive holiday pay with reference to the commission payment as well as his basic pay.  The ECJ has ruled that, where a worker is paid commission calculated on the basis of the sales they make, their holiday pay must include the average commission, calculated over an appropriate reference period.  The rationale used by the ECJ is that a worker may be deterred from exercising his right to holidays if there is a financial disadvantage suffered by him after that period of annual leave.

Why do we care what Leicester tribunal have to say about it?

The ECJ have referred the case back to Leicester tribunal office who will require to decide whether they can interpret the UK legislation to comply with this ruling.  It is likely that the tribunal will also require to decide on the appropriate reference period for re-calculating the commission element.  This ruling is likely to have major cost implications for many employers, including the potential for back-dated claims for up to five years in Scotland on the basis that it amounts to a series of unlawful deductions from wages.  Employment lawyers (and employers) are awaiting the outcome with interest and horror in equal proportions.

Although the tribunal was due to hear Mr Lock’s case again this week, due to other tribunal commitments, the case has now been adjourned until February 2015.

Unfortunately we will have to wait until then to hear the next instalment in this rather worrying saga.

Simon Allison 
Partner – Employment Law
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