Avoid costly claims on holiday pay and unearned commission

In light of the recent rulings in a series of cases on the correct calculation of holiday pay, employers are advised to urgently review their contractual leave arrangements. For employers with large workforces, potential claims could prove costly if not addressed now. Furthermore, the judgment may also have implications for pension entitlements where these are calculated based on variable earnings.

In Lock v British Gas Trading Limited and Others, the Court of Justice of the European Union (CJEU) has confirmed that the EU Working Time Directive (WTD) requires that the holiday pay of an employee whose normal remuneration is made up of a basic salary plus variable commission should include an amount equivalent to the sum he would have earned by way of commission had he been working rather than on annual leave.

Mr Lock’s normal pay included a commission based on sales in the previous month; on average, this represented more than 60 per cent of his remuneration. As he could not achieve sales while on annual leave, this meant that his pay for the month following his holiday was considerably lower than usual. As such, he brought an Employment Tribunal (ET) claim for outstanding holiday pay…

Click on the link below to read the rest of the B P Collins briefing.

Sign in or Register to continue reading this article

Sign in


It's quick, easy and free!

It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.

Register now

Why register to The Lawyer


Industry insight

In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.


Market intelligence

Identify the major players and business opportunities within a particular region through our series of free, special reports.


Email newsletters

Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.

More relevant to you

To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.

Briefings from B P Collins

View more briefings from B P Collins


Collins House
32-38 Station Road
Gerrards Cross

Turnover (£m): 8.20
No. of lawyers: 41