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ARTICLE · 30 MAY 2014

Should Holiday Pay Calculation Include Sales-related Commission In Addition To Basic Pay?

Yes, was the view of the European Court of Justice in Lock v British Gas Trading Limited last week.

United KingdomEmployment and HR

Yes, was the view of the European Court of Justice (ECJ) in Lock v British Gas Trading Limited last week.  This decision is consistent with the earlier opinion of the Advocate General in the same case which was given on 5 December 2013.  Employees should not be deterred from taking annual leave and they might be if their income would be lower because of a period of annual leave taken when they would be unable to generate commission, albeit that the actual reduction in earnings would not occur until after the annual leave.

The case concerned an individual, Mr. Lock, who received a basic salary but earned commission on top which was variable depending on sales achieved and not on time worked.  The commission element made up, on average, 60% of his monthly earnings.  As he could not earn commission whilst on leave his income would be lower if he took leave.  Having issued his claim for holiday pay, the employment tribunal referred it to the ECJ, specifically to question

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