The Court of Appeal has handed down its long-awaited decision concerning the case of British Gas v Lock but has failed to address the issue of calculation, says Croner CEO, Alan Price.
The case of Mr Lock was first heard at the Employment Tribunal in April 2012, it centred on the fact that while Mr Lock was on annual leave he did not generate any commission, as a consequence he was paid reduced remuneration when he returned to work. The Employment Tribunal referred the case to the Court of Justice of the European Union in November 2012, who ruled that this practice had an adverse financial impact on the worker and may deter him from taking annual leave. The matter eventually reached the Court of Appeal and in their recent decision they have endorsed the decision of the Employment Tribunal and Employment Appeal Tribunal.
Commenting on the Court of Appeal Decision, Alan Price, says: “In effect the decision of the Court of Appeal is that when calculating holiday pay, workers are entitled to be paid an amount which reflects the commission they would have earned if they had not taken that holiday. The issue before the Court of Appeal was whether the Working Time Regulations 1998 can be interpreted as including holiday pay in respect of commission, as the wording of the Employment Rights Act 1996 would suggest not.”
The Working Time Regulations 1998, which implements the Working Time Directive, gives workers a statutory entitlement to paid holiday of 5.6 weeks’ annual leave for a full-time worker. On the issue of calculation, Alan Price says: “Unfortunately the Court of Appeal did not address the issue of how pay is actually calculated. Under Regulation 16, during any period of statutory holiday a worker is entitled to be paid at the rate of a week’s pay for each week of holiday.
Under Article 7 of the Working Time Directive there is a requirement for results-based commission to be taken into account when calculating a worker’s holiday pay. The decision of the Employment Tribunal was to read in words to Regulation 16 to achieve conformity to Article 7. This was then subsequently upheld in the Employment Appeal Tribunal. The Court of Appeal has now followed these decisions by adding a new subsection to the Working Time Regulations to get around the problem concerning the wording in the Employment Rights Act 1996, which suggests that workers are not entitled to holiday pay which includes commission.”
