Addleshaw Goddard

UK 200 2014 position: 22

Should holiday pay be calculated to include sales-based commission payments?

The advocate-general has issued an opinion on how to calculate the holiday pay of employees who are paid by way of basic salary plus regular sales commission.

The European Working Time Directive (WTD) provides that workers have the right to paid annual leave. While the WTD does not specify how such payments are to be calculated, our domestic Working Time Regulations 1998 (WTR) provide that workers will be paid at the rate of a ‘week’s pay’ for each week of leave (which is calculated in accordance with ss. 221–224 of the Employment Rights Act 1996).

One area of uncertainty, however, is how variable components of pay should be treated for the purposes of calculating holiday pay. Previous domestic case law had established that workers who earned a basic salary plus additional sales-based commission were only entitled to holiday pay based upon their basic salary. However, a later decision of the European Court of Justice (ECJ) had held that workers should receive their ‘normal remuneration’ while on holiday and this will include any variable remuneration payments that are ‘intrinsically linked’ to the performance of the tasks a worker is contractually required to perform…

If you are registered and logged in to the site, click on the link below to read the rest of the Addleshaw Goddard briefing. If not, please register or sign in with your details below.

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.

Analysis from The Lawyer

View more analysis from The Lawyer


Milton Gate
60 Chiswell Street

Turnover (£m): 171.35
No. of lawyers: 598