Employment Review: May 2015 – Commission – another step in the holiday pay story

The EU Working Time Directive provides that workers are entitled to receive ‘normal pay’ for at least 4-weeks holiday per year. Last November, in Bear Scotland Ltd v Fulton and others, it was held that to give effect to this, non-guaranteed overtime payments should be included in holiday pay and that wording should be added to the Working Time Regulations 1998 so that this can be achieved. However it still left open the question as to whether changes could also be made to the national laws in order to include commission in the 4-weeks holiday pay. That was the issue before the Leicester Tribunal in the recent case of Lock v British Gas.

The decision of the Leicester Tribunal is that there is no difference in principle between payment for non-guaranteed overtime and payment in respect of commission so far as holiday pay is concerned and therefore commission should also be included in the first 4-weeks holiday pay if it is part of an employee’s normal pay.

Comment

Although this decision is not binding on courts and other Tribunals,  it reflects the way the judicial wind is blowing. However, there is still room for the position to change following an appeal by British Gas on two grounds:

• that commission and non-guaranteed overtime are dealt with under different provisions and use different language, and the Employment Tribunal incorrectly concluded that Bear Scotland, a case about overtime, has any bearing on the outcome of Lock; and
• in any event, the EAT in Bear Scotland incorrectly concluded that our UK domestic legislation could be interpreted purposively to give effect to EU law (a point which could, therefore, affect claims that involve payments other than commission, including overtime cases).

The appeal is expected to be heard towards the end of the year.

The Leicester Tribunal was also expected to determine the correct reference period for calculating holiday pay – should it be 12 weeks or longer – but this was left to be determined by a future hearing, so remains unanswered for now.

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