Commission to be included in holiday pay
The Employment Appeal Tribunal has found that an employee’s average commission must be included in their holiday pay.
Mr Lock was employed by British Gas as a salesman and has been represented by the trade union UNISON. His remuneration package included a basic salary plus commission which was based on the number and type of contracts he persuaded customers to enter into. However, when he took periods of annual leave he would be paid just his basic pay and no payment for commission. This was significantly less (around 60%) than his normal pay and a disincentive to take annual leave (against the rules of the Working Time Directive). Mr Lock first challenged this injustice in the Employment Tribunal in April 2012.
British Gas has said that they intend to appeal this decision so that there can be a definitive ruling on this issue. The European Courts of Justice has clarified that it is up to the national courts to determine what employers should use as a reference period for calculation the holiday pay rate.
Until this has all been clarified, we recommend that employers should:-
Set aside money to cover new and potential historical pay-outs
Factor the judgement into pay reviews and new starter salaries
Review existing commission structures.
The judgement will affect the outcome of thousands of other pending holiday pay cases so if commission forms a permanent part of employees pay, then you need to prepare for the increase in your holiday pay bill.
If you need help with this or any other HR related matter contact Coulthard Human Resources on 07946 541606 or email nichola@coulthardhr.co.uk. www.coulthardhr.com
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