Holiday pay After much speculation The Employment Appeal Tribunal has said ‘YES’ commission should be included when calculating holiday pay.

The Employment Appeal Tribunal (EAT) has held that results-based commission should be included when calculating a worker’s four week entitlement to holiday pay under European law.

The case in question……

British Gas Trading Limited v Lock. Mr Lock had normal working hours and was paid a basic salary plus commission on the sales he achieved. Such results-based commission made up approximately 60% of his remuneration. Mr Lock’s holiday pay only included his basic salary and he made a claim that commission should be included as well.

This case went to the European Court of Justice which said that workers should receive their ‘normal remuneration’ during their statutory holiday under European law (4 weeks’ holiday).

What does this mean?

Basically commission should be included when calculating the statutory four weeks’ holiday pay,

although it need not be included when calculating the additional 1.6 weeks’ holiday entitlement provided by UK law in the Working Time Regulations 1998.

What should you do?

Employers should calculate holiday pay so that it includes results-based commission, at least in relation to the statutory four weeks’ holiday provided under European law.

This case however does not provide any further clarity on the appropriate reference period for averaging pay, no surprise there!  So a calculation based on a 12 week reference period may be a good idea but it is important that the reference period is representative of the worker’s normal remuneration.

Confused?  Don’t be. We can help with this or any questions on holiday pay or holiday entitlement. Give us a call on 01980 755075 or email  support@bloodystaff.co.uk