We reported last year the changes to calculating holiday pay in relation to overtime, with the decision regarding commission outstanding. The employment tribunal in Leicester has now reached its decision regarding holiday pay and commission (in Lock v British Gas).
In this case, Mr Lock worked for British Gas as a salesperson on a basic salary with variable commission element. Commission earned was paid in arrears and was based sales secured. Whilst on annual leave Mr Lock could not earn commission and claimed he lost income by taking annual leave bringing a claim for his ‘lost’ holiday pay after taking leave in December 2011 to January 2012.
After the ECJ’s decision last year , the employment tribunal’s judgement is Mr Lock’s holiday pay should include an element for his commission. To accommodate this new words have been inserted into regulation 16(3) of the Working Time Regulations 1998 which now reads:
“(e) as if, in the case of the entitlement under regulation 13, a worker with normal working hours whose remuneration includes commission or similar payment shall be deemed to have remuneration which varies with the amount of work done for the purpose of section 221.”
Companies employing sales people who earn commission as part of their pay will need to adjust their systems. Any claims for back pay made following an employment making a employment tribunal claim will be limited to 2 years prior to the date of the ET1 form.
If you have any questions at all, give us a call on 0845 463 3231. We can help with queries about a certain type of payment and whether to include it, or not; how to set up systems to ensure you only factor in the right additional elements for the 4 week period only; how and where to make changes to your annual leave policy to put into place additional rules regarding annual leave with the purpose of helping to manage cost; or changes to contracts and how your employees work. We’re in the office on 0845 463 3231. – See more at about overtime being included in holiday pay here.