EAT hears Lock case on commission in holiday pay

Employers are looking for clarification on what constitutes holiday pay.
Employers are looking for clarification on what constitutes holiday pay.

The Employment Appeal Tribunal (EAT) heard the appeal in the important case British Gas Trading Ltd v Lock and another, on the inclusion of commission in holiday pay calculations, on Tuesday 8 and Wednesday 9 December.

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Mr Lock, a sales consultant with British Gas, claimed in an employment tribunal that he was owed money on the basis that his holiday pay did not reflect what he would have earned from commission.

On top of his basic pay, he is paid monthly commission, which fluctuates based on his sales.

The tribunal asked the European Court of Justice (ECJ) for clarification on the relationship between holiday pay and commission.

The ECJ concluded that Mr Lock’s commission is directly linked to the work he carries out, and so it is contrary to the Working Time Directive for his commission not to be taken into account when calculating holiday pay. The ECJ left it to the tribunal to apply its ruling to UK law.

The judge in the subsequent employment tribunal decision applied an extra subsection to the Working Time Regulations 1998 to make them comply with the Working Time Directive.

British Gas’s representatives stated during the hearing that it has around 1,000 potential claims from its workers waiting in the wings, pending the outcome of the appeal in this case.

Mr Justice Singh, sitting alone, said at the end of the two-day EAT hearing that he would circulate his draft judgment to the parties in the usual way. With employment cases of this complexity, it normally takes around three months for the judgment to be published.

More details of the main issues before the EAT; arguments put before the EAT by British Gas, Mr Lock, and the Government, which is intervening in the case; and what happens next are available on XpertHR.

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