Holiday pay to include commission

By Antonia Blackwell

The long-awaited decision of the Court of Justice of the European Union (CJEU) in British Gas v Lock confirms that commission must be included when calculating holiday pay, although this is unlikely to bring much comfort to businesses.

Under Regulation 16 of the Working Time Regulations 1998 (WTR), a worker is entitled to be paid during statutory annual leave at a rate of a week’s pay for each week of leave, calculated in accordance with sections 221 to 224 of the Employment Rights Act 1996.

If the worker has normal working hours but their pay varies, they are entitled to holiday pay based on their average pay during those normal working hours over the previous 12 working weeks. Until recently, only payments due under the employment contract for normal working hours were taken into account for these purposes…

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