Holiday pay and commission – still up in the air?

Following the decision in Lock v British Gas, it is now an established principle that commission should be taken into account in calculating the amount that an employee should receive whilst on holiday. Commission would usually relate to an earlier period and therefore be paid whilst an employee is on holiday, but how do we work out  the level of commission an employee loses out on as a result of being on leave? What is the appropriate comparison or reference period, if an employee has not been at work, and not done any deals, how can we work out what the employee would have achieved had he been at work?

It had been hoped that this week’s Employment Appeal Tribunal decision in the long running saga of Lock v British Gas would provide this clarity, however the decision instead focuses solely on the technical legal points of how the UK working time legislation should be interpreted in light of the ECJ decisions. The issue of how much an employee should be compensated so that they are not deterred from taking holidays remains up in the air.

The Lock case could still be appealed further, or perhaps one of the hundreds of other cases on hold at the tribunal, both against British Gas and other employers will provide us with the clarity we require. The position now is however uncertain. Holiday should take into account commission, however we simply do not know what will be considered an acceptable calculation as to how loss of future opportunity should be properly calculated.

This leaves us in an uncertain position, we know that commission should be considered when calculating holiday, and that a commission earning employee should be considered as having remuneration which varies with the level of work done, but what we do not know is how we work out the extent of the opportunity lost by the employee by taking annual leave.

For further advice on holiday pay, commission or any aspect of worker or employee rights, contact Lawspeed on 01273 236 236.

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