19th October 2016

Holiday pay case: British Gas v Lock

The on-going saga of Mr Lock’s case against British Gas has recently been to the Court of Appeal.  You will recall we have looked at this case previously in our news updates.

In brief, Mr Lock was engaged on a basic salary plus commission on the sales he achieved.  He had normal working hours and his holiday pay only included basic salary and no commission.

The lengthy litigation started with a claim in the Employment Tribunal where he argued that his reduced income during his holiday amounted to a breach of the Working Time Regulations 1998.  This case has been referred to the European Courts of Justice, then the Employment Tribunal, appealed to the Employment Appeal Tribunal and now there is a Court of Appeal decision.

The latest Court of Appeal decision confirms that our Working Time Regulations (the Regulations) must be interpreted in line with the European Directive regarding holiday pay.  The Directive requires contractual commission to be reflected in statutory holiday pay as it is part of the worker’s “normal remuneration”.

Employers have been seeking clarification on how to work out their worker’s statutory holiday pay when calculating a commission element of it.  Unfortunately this case provides no answer.

For those workers with irregular working hours a 12 week reference period is used and so whilst this may seem a fair reference period to use, in some cases there are seasonal fluctuations to a worker’s commission and so employers need to find a reference period which is representative.

On a separate point, it will be interesting post Brexit to see whether the Regulations as a piece of EU derived legislation will be repealed or amended, so watch this space.

In the meantime, if you would like advice on the Regulations or any other area of employment law, please contact our Employment Department on 01730 268211 or at .

N.B. Please note that the above information is a guide only and does not constitute legal advice. We recommend seeking specialist legal advice on your own particular circumstances.