Holiday pay and commission? Let us make sense of it for you.

The case of British Gas v Lock has been somewhat of a landmark case this year. The court found that employers must pay their employees commission during their periods of annual leave.

This could have big implications for employers, significantly increasing wage bills, particularly for sales staff.

There has been a lot of talk recently regarding payments accrued during the normal course of employment and whether these payments should be taken into account when calculating holiday pay. Employers have no doubt taken a blow when it comes to the court finding that commission payments should be included in holiday pay. British Gas are appealing this, but in the mean time, employees are able to bring claims for back payment, although questions about how to calculate this are still unanswered. This is leading to a lot of frustration for employers who are left with little guidance on how to implement these practices.

So what was the case about?

Mr. Lock was a sales representative for British Gas, he argued that when he was on annual leave, he was unable to generate sales and therefore his commission payment was significantly lower when he returned from his leave. He claimed that this would deter people in his position from taking holidays and that his holiday pay should include a commission payment as though he had been at work.

It all boils down to ‘normal remuneration’, employees must receive their ‘normal remuneration’ even when they are on holiday, commission is deemed to be ‘normal remuneration’ as it is ‘intrinsically linked to the performance and tasks under the worker’s contract’ Employees must not suffer detriment because they are taking time off. British Gas are appealing the jugdment in the Court of Appeal.

Need help on calculating holiday pay? Have questions about commission payments?

Call us, we can help, 0115 870 0150 or email masa@yourhrlawyer.co.uk