Anticipated, but unwelcome to employers, the Court of Justice of
the European Union (better known as the ECJ) handed down a judgment
on 22 May 2014 that leaves a hole in the holiday pay paid to
workers by many employers and, in turn, exposes them to potentially
significant liabilities stretching back over many years. The
case of Lock v British Gas Trading Limited (C-539/12) is
yet to be interpreted by the Courts in the UK, but it is likely
that it will have a significant impact on many employers who use
commission as a form of remuneration.
Law
To briefly recap the law prior to Mr Lock's case : (i) Every
worker has the right to be paid annual leave of at least 5.6 weeks
under the Working Time Regulations (ii) Holiday pay is calculated
as a week's pay for each week's leave (iii) Calculating a
week's pay depends on many things including whether a worker
has normal working hours (iv) The effect of the definition of a
week's pay in the UK is that many elements of
