Holiday Pay – are you paid what you are worth?
Important news this week on how holiday pay should be calculated. The European Court of Justice (ECJ), in British Gas v Lock has confirmed that a worker’s statutory holiday pay cannot be limited to basic salary where commission is a part of their remuneration.
Mr Lock was a salesman on a basic salary plus commission, which depended on sales achieved. Typically with sales people, he could not earn commission whilst on leave, and therefore would lose income by taking it. He therefore brought a claim in the employment tribunal for his holiday pay after taking leave in December 2011 to January 2012.
The employment tribunal hearing the claim made a reference to the ECJ to ask if commission should be included in his holiday pay and the answer was a clear yes.
The case is important as it reaffirms the principle that where a worker’s pay consists of a basic salary and variable elements directly linked to work, then holiday pay should be paid on the basis that a worker receives pay comparable to normal pay whilst on holiday.