Winckworth Sherwood

UK 200 2014 position: 81

Holiday pay to include commission

The European Court of Justice (ECJ) has ruled in the case of Lock v British Gas Trading Ltd C-539/12 that when calculating statutory holiday pay for their employees, UK employers need to take into account not just their basic pay but also the contractual commission they would have earned during the period of their holiday.

Mr Lock was a sales consultant for British Gas who was paid commission monthly under his contract of employment based on the sales he achieved. His commission made up about 60 per cent of his annual pay. When he took annual leave, he did not generate sales or any consequential commission. His employer calculated his holiday pay on his basic salary only and ignored any possible lost commission. Mr Lock challenged this approach through the employment tribunal, which, in turn, referred the issue to the European court to determine whether commission should be included in his holiday pay…

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