26th March 2015

Lock, Stock and… no major smoking barrels Commission must feature in holiday pay

The Employment Tribunal in Leicester has delivered its judgment in the case of Lock v British Gas Trading.  Mr Lock was paid a basic salary plus commission.  The commission which he earned would be reflected in his pay sometimes months after the sales to which the commission related had been made.  His commission payments reflected a large part of his overall pay.  When Mr Lock took holidays, he would be paid for any commissions earned prior to the holiday.  Mr Lock’s complaint was that because he could not earn commissions when on holiday, his wages would be lower in the period following any holidays.

A previous ruling from the CJEU found that holiday pay should reflect what an employee should have been paid had they been working.  Mr Lock argued on the back of this that his pay ought to be enhanced to reflect the commission that he would have earned had he not taken holidays.  The tribunal agreed.

The issue for the tribunal was whether the UK Working Time Regulations 1998 (“WTR”) could be interpreted in a manner which conformed to the European approach.  This was achieved by amending the following words to Regulation 16(3) of the WTR “(e) as if, in the case of the entitlement under Regulation 13, a worker with normal working hours whose remuneration includes commission or similar payment shall be deemed to have remuneration which varies with the amount of work done for the purpose of section 221.

Employers who operate commission payments will need to consider the impact of this decision.  It is worth noting that the decision applies only to the 4 weeks’ basic annual leave.  The additional 1.6 week’s leave stems from UK law and is not affected by the decision.

Jack Boyle
Senior Solicitor – Employment Law

Back to News & Legal updates