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Advocate-General Opinion – commission to be included in the basis for calculating statutory holiday pay

In Z.J.R. Lock v British Gas Trading Ltd and Others, Lock’s (L) remuneration

In Z.J.R. Lock v British Gas Trading Ltd and Others, Lock’s (L) remuneration consists of basic pay and commission, both paid monthly. The amount of commission fluctuates according to sales achieved. Commission is not paid when the work generating the commission is done, but several weeks or months after the sales contract with British Gas is entered into. L was on paid annual leave from 19 December 2011 to 3 January 2012. During L’s leave period, his remuneration consisted of basic pay and commission he had earned during the previous weeks. In the course of the year, he received an average monthly commission payment of £1912.67. During the month he took annual leave, he received £2350.31 commission. He also received basic pay of £1222.50 per month.

While L was on leave, he was unable to make any new sales or follow up on potential sales and not able to generate commission during that time. As that had adverse effects on L’s salary during the months following his annual leave, he lodged a claim for outstanding holiday pay in respect of the period from 19 December 2011 to 3 January 2012. An ET referred a question to the ECJ concerning the calculation of holiday pay where commission payments fluctuate, i.e. does the Working Time Directive (WTD) require that a worker is paid in respect of periods of annual leave by reference to the commission payments he would have earned during that period, had he not taken leave, as well as his basic pay?

Advocate General (AG) Bot has given an Opinion that where remuneration received by a worker comprises, on the one hand, basic pay and, on the other, commission, the amount of which is paid by reference to sales made and contracts entered into by the employer in consequence of the worker’s own work, the WTD requires such commission to be included in the basis for calculating the remuneration payable to that worker in respect of paid annual leave required by the Directive. We will have to wait and see whether the ECJ follows the AG’s opinion. In the meantime, employers facing similar circumstances should take legal advice.

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