Wednesday, July 18, 2018
Sunday, 12 April 2015 21:17

Holiday pay and commission payments

Written by  Innes Clark
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Holiday pay was back in the news last week when the long awaited decision in Lock v British Gas was issued.


Mr Lock was employed as a salesman and although he received a basic salary approximately 60% of his monthly income was commission based. Mr Lock's commission was based on sales that he negotiated.

As such, Mr Lock's commission was dependant on the outcome of his work. When he took his annual leave, he was obviously not securing deals and therefore there would be a period of time, following his return from holiday, where he would not receive his usual commission payments. After taking leave between December 2011 and January 2012, Mr Lock brought a claim in the Employment Tribunal for loss of earnings. The case was referred to the European Court of Justice and subsequently referred back to the Employment Tribunal to issue a final decision. The ET decided last week that, in terms of the Working Time Regulations, Mr Lock's holiday pay should have included an element for his commission payments. It is important to bear in mind that this decision applies only to Mr Lock's 4 week entitlement under the Working Time Directive and not to the additional 1.6 week entitlement provided for under the Working Time Regulations.

As I have mentioned previously, the Government reacted swiftly to protect employers from backdated claims following on from another holiday pay case, Bear Scotland, which decided that holiday pay calculations should take into account certain overtime payments. They did this by introducing the Deduction from Wages (Limitation) Regulations 2014 with a view to limiting the period of time in respect of which employees can claim for backdated, underpaid holiday pay. For any claims for underpaid holiday pay raised on or after 1 July 2015, the Employment Tribunal will not be able to consider any underpayment where the date of the payment was more than two years before the Tribunal claim was raised. There had been fears that claims could go back for 5 years (in Scotland) or 6 years (in England and Wales) or even back to 1998 when the Working Time Regulations came into force. Employers who have claims raised against them before 1 July 2015 still face this possibility. I would recommend that advice is taken as a priority if you consider that your organisation may be affected by this issue.

Last modified on Sunday, 12 April 2015 21:19
Innes Clark

Innes Clark

Employment Lawyer
Morton Fraser Solicitors 

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