Holiday Pay Ruling!

Earlier last week British Gas were unsuccessful in their appeal against the employment tribunals decision over holiday pay in the Employment Appeal Tribunal. The decision means that employees must now be paid for their holiday based on both basic pay, and any commission they earn. This may also extend to bonuses and overtime. This is likely to have a significant impact on the pay of workers whom previously have lost out on large payments of commission during annual leave.

Mr Lock was employed by British Gas as a sales consultant. He was paid his basic pay and commission on sales which amounted to 60% of his pay. When he took annual leave he was not paid for any commission he would have earnt if he had not been on annual leave. The Court found that this could have the effect of deterring workers from taking annual leave, contrary to Article 7 of the Working Time Directive.

This decision confirms earlier decisions about payments during annual leave and therefore now ensures workers will be paid commission during annual leave. It is further extended as claims for previous periods of annual leave that did not include such payments can be made. The Deduction from Wages (Limitation) Regulations 2014 means that employees could make a claim for deductions from holiday pay for up to two years ago.

If an employee contacts you about deductions from their holiday pay then please contact us for guidance. If you are also not currently paying an amount for these additional payments during annual leave to your employees please contact us for guidance on putting this into place as soon as possible to avoid claims for deductions from wages.

Lawgistics members can get advice on all employment law matters.


Authors: Stephanie Ball

Published: 02 Mar 2016


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