As if Holiday Pay Calculations were not enough!
Just as we start the holiday season the arrival of the long awaited ruling in Lock -v- British Gas and others hits us which has left some blanks for us to fill in when looking at holiday pay calculations. In the Lock case the payment of commission which was on top of his salary was paid monthly, in Mr Lock’s case the commission element amounted to around 60% of his income.
This feature meant that the CJEU ( Court of Justice in the European Union) considered the commission element to be permanent enough to be worthy of consideration in holiday pay calculations. Yes, that’s right, commission is now to be considered for calculations of holiday pay. British Gas argued that their rate of commission was paid at a rate to reflect the loss of earning potential during holidays but this was rejected.
So, bearing in mind the additional complexity of calculating the commission for holiday pay, the employer also has to remember this applies to only the 4 weeks holiday allowed under EU legislation and not anything additional holiday which may fall under contract. A nightmare.
It’s really time to look very closely at commission arrangements and work out whether they meet this new set of criteria and amounts payable in respect of holiday pay entitlement so employers can work out cashflow. It’s likely we will see some claims for back pay, and of course a number of employers will find increase in pay out a burden too far and reduce their work force payouts accordingly.
For help and advice in checking your position in the light of this case please contact us at either [email protected] and phone 0203 189 1914