Holiday pay must include commission, ECJ rules
By Kate Hodgkiss
The European Court of Justice (ECJ) has handed down judgment in a case that could mean that employers face huge liabilities for claims for holiday pay. The issue arises because of an apparent conflict between UK and European law as to how holiday pay should be calculated and in particular whether elements of remuneration such as overtime and commission must be included.
The Working Time Directive (WTD) entitles workers to four weeks’ leave but does not specify how pay should be calculated. The directive is implemented in the UK by the Working Time Regulations 1998 (WTR). Under the WTR, workers are entitled to 5.6 weeks’ leave and must be paid at the rate of a week’s pay for a week’s leave. The Employment Rights Act 1996 (ERA) sets out how to calculate a week’s pay; the calculation depends on a number of factors including whether or not a worker has normal working hours. The effect of the week’s pay provisions is that many common elements of remuneration, such as overtime, commission and bonus, are excluded from statutory holiday pay.
However, in cases interpreting the WTD, the ECJ has stressed the need for normal remuneration to be maintained during the period of annual leave. In a 2011 case (Williams v British Airways), the ECJ ruled that (1) workers on annual leave should receive their normal remuneration and (2) normal remuneration entitled a worker to any payment that is intrinsically linked to the performance of the tasks that he is required to carry out under his contract of employment. The ECJ held that it is then left to the national court to assess the intrinsic link between the various components making up the total remuneration of the worker and the performance of the task he is required to carry out under his contract of employment…
Click on the link below to read the rest of the DLA Piper briefing.
News from DLA Piper
News from The Lawyer
Briefings from DLA Piper
The interpretation of the scope of application of the investor’s right to withdraw from any contracts for the placement of door-to-door financial products has again captured the attention of all players.
Tax Newsletter — July/August 2014: SAT strengthens reporting request under China CFC rules; and more
DLA Piper has released the July/August edition of its Tax Newsletter, which provides a review of PRC and Hong Kong tax developments.
Analysis from The Lawyer
Shearman & Sterling is making its presence felt in the City, squaring up to magic circle firms and looking to muscle in on key relationships. Private equity house Bridgepoint is one outfit that has had its head turned by the US firm.
A new breed of lawyer is smoothing the path for companies entering emerging or unstable jurisdictions