Holiday pay commission ruling: Court of Appeal judgment in Lock v British Gas

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Holiday pay must include compensation for any results-based commission that would ordinarily be earned, according to the latest judgment in the long-running case of Lock v British Gas. The Court of Appeal judgment in Lock and another v British Gas Trading has been eagerly anticipated since the case on working time was heard in July 2016. The case is important to any employer that runs a commission scheme, or which regularly makes other payments in addition to basic salary that are intrinsic to the job, for example overtime or stand-by payments. Aye Limbin Glassey, employment law partner at Shakespeare Martineau, said:  “Although the ruling marks a significant step for employers who have been in limbo for some time over holiday entitlement for employees on commission schemes, the story is far from over and another appeal is highly anticipated. “Employers will now be required to include commission payments in holiday remuneration, and this could have severe financial implications. Despite the potential for an appeal, now is the opportune time for employers to put the necessary measures in place and open lines of communication with beneficiaries.” She added that urgent guidance is needed from the Government on “timescales and implementation”.

Background to Lock v British Gas

Mr Lock, a salesman, claimed at employment tribunal that British Gas owed him money on the basis that his holiday pay did not reflect any commission that he would have earned had he been working. On top of his basic pay, Lock is paid monthly commission, which fluctuates based on his sales. The European Court of Justice (ECJ) ruled that since Mr Lock's commission is directly linked to the work he carries out, it