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Holiday pay and commission – a quick recap

Last week we spent two days in the Leicester Employment Tribunal whilst the Tribunal re-considered Mr Lock’s claim relating to commission and holiday pay. You may have even seen our tweets, live from the Tribunal itself @DWF_Employment

Calculating holiday payJust to recap Mr Lock’s salary comprised a basic salary and commission payments which were based on his sales. His commission made up over 60% of his total remuneration. When he was on holiday Mr Lock received an average of his pay over the preceding 12 weeks before he took the holiday.

However, he could not make any sales whilst on holiday and therefore he pursued a case to Tribunal on the basis that he suffered a loss in commission because it dropped in the period after he returned from leave.

The CJEU concluded that the Working Time Directive (WTD) must be interpreted as precluding national legislation and practice which allows a worker whose remuneration consists of a basic salary and commission, to be paid remuneration composed exclusively of his basic salary during periods of annual leave. In other words commission must be factored in when calculating holiday pay.

The case then reverted back to the Tribunal to decide, on the facts of the case, whether British Gas has adequately factored in commission payments when calculating Mr Lock’s holiday pay.

Unfortunately, the practical aspects of the case were not discussed at length – instead the discussion at the hearing focused on whether the Working Time Regulations 1998 (WTR) can be read in a purposive manner that render them consistent with the WTD or whether it is possible to insert words into domestic legislation to make the WTR conform.

Michael Ford QC, on behalf of Mr Lock, stressed the importance of interpreting the WTR in line with the Directive, so as not to go against the ‘grain’ of the legislation. He supported his assertion by stating that he is not aware of any UK cases where legal certainty has trumped the duty of interpretation. He went on to say that the precise wording of the WTR does not matter – what is important is its interpretation. Michael Ford QC was also of the opinion that issues in this case had already been dealt with in the case of Fulton v Bear Scotland Ltd.

On the flip side, John Cavanagh QC on behalf of British Gas suggested there was a subtle difference between the facts in the Lock case and the facts in Fulton v Bear Scotland Ltd – the Bear case dealt with guaranteed overtime, whereas this case looks at results based commission. He said different sections of the legislation apply and accordingly Bear is not binding on the Tribunal in this case. On the subject of legal interpretation, he highlighted two cases where it had been impossible to interpret domestic legislation in accordance with EU legislation and submitted that in the circumstances, legal certainty should prevail.

We now await the decision of the Tribunal.

To get up to date on holiday pay news and developments visit our holiday pay hub.

Questions about holiday pay? Get in touch

Keep up to date and follow us: @DWF_Employment

 

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further