Are employees entitled to commission payments while on Holiday? | Howells Solicitors

Are employees entitled to commission payments while on Holiday?

Yes, according to a recent decision of the European Court of Justice in Lock v British Airways.

This case involved a sales agent working for British Gas. He was paid a basic salary plus commission payments. When he took annual leave the result of this was that for the period after his annual leave he was paid less as he had been unable to earn commission during the period that he was not working. When he was off, Mr Lock was only paid for his basic salary. He made a claim to the Employment Tribunal for outstanding holiday pay. The case was passed to the European Courts for guidance as to whether this was against European laws.

The right to take paid annual leave derives from European law and has been incorporated into domestic laws through the Working Time Regulations 1998. The premise of paid annual leave is to allow an employee time off from work for their own safety and health. The European Court identified that this is an important principle of EU law and that there can be no derogations from this. They applied the previously established principle that the payment for annual leave should be the workers normal remuneration. They concluded that therefore holiday pay should be calculated in such a way to include commission payments.

The effect of this could be immense for local businesses. Employers should ensure that where they do pay commission to workers, that this is reflected in the pay they receive while taking annual leave. A worker who receives commission payments, would, as a result of this decision, be able to make a claim for outstanding holiday pay in the Employment Tribunal in the form of an unlawful deduction from wages claim. Workers have 3 months from the last occurrence in an unbroken chain of deductions to make these claims. Potentially, these claims could be for several years of holiday pay. It is important that businesses take steps as soon as they can to tighten up their payroll systems and their holiday policies.

The Employment Appeal Tribunal is to hear cases later this year about a workers entitlement to a bonus over their period of annual leave.

If your business receives a claim against them or are conscious to avoid any claims, seek advice as soon as you can. Howells Solicitors are happy to help you.

 

Article submitted by
Tom Bernard, Employment Solicitor

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