Ruling states commission should be included in holiday pay

A recent ruling in employment law has created a raft of new enquiries as businesses attempt to implement the changes into their business, report the employment law team at Farleys Solicitors.

At the end of March, a ruling in the European Court of Justice clarified that workers who receive commission as part of their pay are entitled to receive the benefit of that commission during periods of annual leave.

Previously, employees would only be entitled to payment at basic rate whist on holiday, with no account for loss of commission being made. Employers throughout the region have therefore been seeking advice about the matter, with some already having faced backdated pay claims from employees.

In the landmark ruling in the case of Lock vs British Gas, it was ruled that the payment of commission in a British Gas sales representative’s monthly pay was permanent enough to be regarded as part of his ‘normal salary’ and therefore, loss of such payments as a result of time taken off work for holiday was contrary to his rights. Employers will therefore need to make changes regarding how they pay commission, or else risk facing claims from employees.

Victoria Mitchell, head of employment at Farleys Solicitors in Blackburn commented: “This ruling is a landmark decision and will affect all employers who utilise commission payments as part of remuneration packages. Employees and employers that are affected by commission should seek advice at the earliest opportunity. Although the judgement is quite clear, there are quite complex rules applying to timescales for when employees can make backdated claims. “It should also be noted that employers need also make similar allowances for employees that regularly work overtime as again, they are now entitled to claim the benefit of being paid for overtime even when they are on holiday."