In Z.J.R. Lock v British Gas Trading Limited, Lock is not paid sales commission at the time that the sales are made, but several weeks or months following the conclusion of the contract between British Gas and the client. Lock earned an average monthly commission of £1912.67. When he went on holiday for 2 weeks he received basic pay of £1222.50 and commission earned over previous weeks of £2350.31. As Lock did not work during his holiday, he made no new sales in that period, which in turn had an adverse effect on his salary during the following months. So Lock made a claim for an increase to his holiday pay to account for no commission earned in that period.

An employment tribunal asked the ECJ whether the Working Time Directive (WTD) requires, in such circumstances, that (i) the commission which a worker would have earned during his annual leave must be taken into account in the calculation of his holiday pay and, if so, (ii) how the sum payable to the worker must be calculated.

With regard to the first question, the ECJ ruled that where a worker does not generate any commission during the period of his annual leave and in the period following his annual leave is only paid his basic salary, that adverse financial impact may deter the worker from actually taking leave, which is all the more likely in a situation such as Lock’s, in which commission represents on average over 60% of his monthly wage. Therefore, such a reduction in holiday pay is contrary to the WTD.

When calculating the amount of commission payable, the ECJ held that holiday pay must be determined in such a way as to correspond to the normal remuneration received by the worker. Where remuneration is made up of several components, the normal remuneration payable during annual leave under the WTD requires a specific analysis. Where, as in this case, there is an intrinsic link between the commission received each month and tasks required to be carried out under the contract, such commission must be taken into account in the calculation of holiday pay. It is for the national court or tribunal to assess whether an average over a reference period is representative of calculating the commission payable. It will therefore now be for the tribunal to formulate the 'average' calculation.

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