Employment Law Barrister and Slee Blackwell Partner, Roderick Moore, looks at a new holiday pay ruling in Lock v British Gas Trading Ltd ECJ 22.5.14 (C-539/12), predicting a flurry of compensation claims for backdate holiday pay from workers employed on a commission basis.
Lock v British Gas Trading Ltd is a new decision from the European Court of Justice (ECJ) on holiday pay which is expected to have widespread repercussions for people who work on a commission basis and their employers. Employers who have paid holiday pay at the basic rate (i.e. without commission) to employees for whom commission is an intrinsic part of their pay package now face compensation claims for backdated pay.
The court ruled that a worker’s right to paid annual leave under the EU Working Time Directive was infringed when his future remuneration was reduced because he had been unable to generate commission while on holiday. This represented a deferred financial disadvantage that was capable of deterring workers from taking annual leave, contrary to the purpose of the Directive. The commission payments were directly and intrinsically linked to the claimant’s work and so formed part of his normal remuneration. Accordingly, he was entitled to receive additional sums in respect of annual leave representing commission he would have earned had he not taken that leave, the method of calculation being for the national court to assess.
The implications of this decision are still being considered but it seems certain that it will cost British employers many millions of pounds in compensation for backdated pay.
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