• Appeal rejected in landmark holiday pay case

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  • 22 Feb 2016
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Unison defends ruling at EAT to secure money for workers on commission

An appeal in a landmark case on holiday pay has been rejected by the Employment Appeal Tribunal today, meaning people who earn commission will see their pay bumped up to include it.

The decision in the long-running saga of British Gas v Lock secures the original ruling that holiday pay must take account of people who earn both commission and basic pay.

It is the latest ruling in the case, which centres on how employers should calculate holiday pay under the EU Working Time Regulations 1998 (WTR). Previously workers who earned commission would not see this reflected in their holiday pay, which Lock claimed was unfair. Employees earning commission would only receive paid holiday leave based on their basic pay which was less than normal pay and created a disincentive to take annual leave.

However, this latest decision may not be the end of the matter as employer British Gas has requested permission to take the case to the Court of Appeal to gain a definitive ruling.

The energy firm is expected to ask the Court of Appeal to re-examine the judgment of another influential case - Bear Scotland v Fulton – in an attempt to overturn the verdict.

The British Gas v Lock case is related to this case because under EU law the WTR only directly affects public sector employers. But in the case of Bear Scotland v Fulton, the EAT ruled that the UK’s domestic law, which applies to all employers, must be interpreted to conform to EU law.

This means UK employers are required to take into account non-guaranteed overtime payments when calculating pay for the basic four week holiday entitlement under WTR. The tribunal in Lock ruled last year that the same approach applies to commission payments.

In a statement, law firm Eversheds said: “Many thousands of other claims, against other employers in England, Wales and Scotland, have been stayed pending today’s decision. No doubt most of those employers will now be asking for that stay to remain in place until we have a definitive ruling.

"In the meantime, the case of Bear Scotland is itself expected to go back before the EAT later this year, with the employees challenging the rule that the right to claim historic arrears of holiday pay is lost if there is a gap of more than three months between under-payments.”

Unison, the union representing Lock in the case was pleased with today’s outcome. General secretary Dave Prentis said:  “This is a victory for workers and a victory towards fair pay in this country and beyond. We have consistently been successful in its fight for workers to have their commission included in their holiday pay. This case will have implications for thousands of workers in the UK and in Europe who for years have been denied a fair deal.

“Some workers who rely on commission and overtime lose a significant amount of money when they take the annual leave they are entitled to. And it is only fair that workers should receive their normal pay, including their regular commission, for periods of annual leave.”

 

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  • It would be interesting to speculate whether the same decision would have been reached if the EAT had comprised three members hearing the case so that experience of organisational practices on commission schemes was taken into account.

    Although the gist of the decision was to avoid a worker being discouraged from taking holidays because by only basic pay would be received, employers are left with a slight tangle as the way in which results based commission is paid may give rise to anomalous payments.