October 31, 2016

Court of Appeal Decision in Lock: Holiday Pay Should Include Commission

The Court of Appeal has given its much anticipated decision in British Gas Trading Ltd v Lock A2/2016/1163. Confirming the earlier decision of the Employment Appeal Tribunal, the Court of Appeal has held that U.K. law should be interpreted in line with EU law to provide that commission must be included in the calculation of holiday pay.  

Regrettably, the Court of Appeal declined to take this opportunity to provide some much needed guidance on a number of outstanding questions in relation to holiday pay. For instance, it declined to make any finding as to the reference periods to be used when calculating holiday pay which includes commission. It also made clear that its decision was only intended to apply to the case in hand; it would not be drawn into discussing how its decision would apply in different types of cases (e.g., bankers who receive a large commission). Employers must now await further guidance on these matters.

We understand that British Gas is looking to appeal the decision to the Supreme Court and we will keep you updated on developments in this regard. Unless and until the Supreme Court makes a finding, the Court of Appeal’s decision should be followed and we would therefore recommend that employers ensure their holiday pay practices reflect it. 

For our previous updates on this litigation, see “Update on Holiday Pay: Commission and Overtime” and “U.K. Employment Tribunal Confirms That Holiday Pay Should Include Commission.

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