Employment Tribunal rewrites the law so that workers can be paid commission in respect of holiday periods

Lock v British Gas is the latest, but will not be the last, in a series of cases on holiday payments. We already know that workers’ holiday pay should include non guaranteed overtime as set out in our blog Holiday Pay Claims EAT Decision

This case is significant as workers will now claim that, although only a tribunal case and so not binding on other courts, Lock creates a UK precedent on which they can base their claims for commission payments.

Mr Lock received basic pay and sales commission in his holiday pay. However because he did not have the opportunity to make new sales and so generate commission during his holiday period, Lock lost out in his subsequent monthly pay packets. This is inconsistent with the legal principle already established that a worker should not be deterred from taking holiday because of being financially worse off.

The tribunal dealt with this by rewording the Working Time Regulations 1998 so that Mr Lock would be entitled to these commission payments.

The good news for employers arising from these cases, is that commission (and overtime) is payable only for the first four weeks of the annual holiday entitlement. Following a change in the law introduced by the Coalition Government, from 1 July 2015 tribunals will not consider holiday pay claims extending back over more than 2 years.

However, frustratingly for employers the tribunal left for another day the million dollar question of how the commission (and overtime) payments should be calculated i.e. should they be based on 12 weeks pay or can employers use some other representative period. If over time or commission is seasonal then a period longer than 12 weeks may be appropriate. Watch this space for further developments as the Lock tribunal reconvenes.

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Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.

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