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Appeal Court upholds ruling on adding commission to holiday pay

The Court of Appeal has upheld an employment tribunal finding that employees are entitled to have commission earnings added to their holiday pay.

The case involved British Gas and one of its salesmen, Mr Joe Lock. Mr Lock earned a basic wage plus commission. However, when he took holidays, he was only paid at the basic rate, with no element of commission.

He challenged this in 2012. The Employment Tribunal referred the case to the Court of Justice of the European Union (CJEU). It ruled that his commission was “intrinsically linked” to his work and should be included in his holiday pay.

It returned the case back to the tribunal to determine how the ruling could be incorporated into British law under the Working Time Regulations (WTR).

Last year, the tribunal held that the European Court’s ruling was compatible with the WTR and so commission should be included in holiday pay. The Court of Appeal has now upheld that decision.

It means that companies have to include commission in holiday pay. Employers should note that the ruling only relates to the four week holiday entitlement under European law; it doesn’t include the extra 1.6 weeks available under UK law.

Please contact us if you would like more information about the issues raised in this article or any aspect of employment law.