ECJ ruling in Lock affects holiday pay for commission-based employees
In ancient Roman myth, Janus was the god of beginnings and transitions, depicted as having two faces, since he looked to the future and to the past. Bringing myth to reality (and with apologies for the tortured metaphor), looking to the future and the past is exactly what the European Court of Justice’s (ECJ’s) decision in Lock v British Gas now requires employers to do. The decision has expensive implications (in a forward-looking sense of future wage bills and in a backwards-looking sense in relation to potentially significant claims) and it’s worth doing the groundwork now.
The ECJ’s finding — that holiday pay must include an element calculated to reflect future commission lost as a result of the employee taking leave — is, without doubt, a game-changer. It is likely to be followed by an Employment Appeal Tribunal (EAT) finding later this year that holiday pay should also include overtime (read on for more detail).
As reported in our January briefing this year, Mr Lock (a sales consultant) had brought a tribunal claim against British Gas for unpaid holiday. Mr Lock was paid a basic salary plus commission (paid in arrears) for sales made in preceding periods and his commission equated to around 60 per cent of his total income. While the pay he received during his holiday included commission from sales made in previous periods, he was obviously unable to make sales (and therefore generate future commission) during his holiday. The effect of him taking holiday, therefore, was that he suffered a reduced income in the period following his return to work…
Click on the link below to read the rest of the Walker Morris briefing.
Sign in or Register to continue reading this article
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
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
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.
News from Walker Morris
News from The Lawyer
Briefings from Walker Morris
Also: £90k fine for nominated adviser; ’proper purpose’ for inspecting a register of members; and more.
Some interesting recent Technology and Construction Court cases that provide clarification on adjudication procedures and rules.
Analysis from The Lawyer
Which firms are cutting it in this era of slimline rosters, and who are the GC new brooms making clean sweeps? The Lawyer can reveal all
The law school war shows no signs of ending. But we have, perhaps, reached the end of the beginning.