Addleshaw Goddard

UK 200 2013 position: 23

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.

Briefings from Addleshaw Goddard

View more briefings from Addleshaw Goddard

Analysis from The Lawyer

  • pannone.jpg

    Another Mancunian merger for Slater & Gordon?

    Could Slater & Gordon achieve its stated aim of becoming a top consumer brand by acquiring Pannone?

  • Addleshaws

    Number crunching: Addleshaw Goddard

    The past five years have not been easy for Addleshaw Goddard. The firm’s revenue fell 7 per cent from £173.1m to £161.9m between 2008/09 and 2010/11 and despite finances looking up in 2011/12, when Addleshaws reported a 30 per cent increase in net profit, it has shown no notable compound growth in turnover since 2007/08.

View more analysis from The Lawyer


Milton Gate
60 Chiswell Street

Turnover (£m): 166.50
No. of Lawyers: 592