The final piece in the holiday pay jigsaw?
In the case of Lock v British Gas the EAT has upheld the decision of the Leicester employment tribunal that commission payments should be taken into account when calculating holiday pay.
In 2012, Mr Lock brought a claim for unlawful deduction from wages. He was the lead claimant for a large number of tribunal claims lodged in Leicester and other regions.
When Mr Lock took holiday, he was entitled to basic pay and continued to receive commission based on his earlier sales. However, his commission payments were lower during the months that followed because he had been unable to generate sales while on holiday. Mr Lock successfully argued that holiday pay should reflect the income that a worker would usually receive had he/she been working, and therefore that these future payments should be enhanced to reflect the commission that he would otherwise have earned during his annual leave.
British Gas appealed. The EAT this week dismissed British Gas’ appeal.
What does this mean for businesses?
Unfortunately the story does not end here. British Gas has already confirmed its intention to appeal the EAT’s decision. If its application is successful then it may be some months again before we have a final decision on the issue and employers can be clear on whether or not commission payments should be included when calculating holiday pay, although it is likely that this will be the case.
If leave to appeal is refused, the case will be resubmitted to the original tribunal in order to establish on the specific facts whether Mr Lock did in fact suffer an unlawful deduction from wages.
If you are an employer that regularly pays commission payments and you have not already done so, we recommend that you review your current practices in order to alleviate the risk of unlawful deduction from wages claims arising and in order to assess potential liability.
If you have any queries or would like further advice please do not hesitate to contact our Employment Team.