Is it fair to only earn less than half of your typical salary when you take holiday? Mr. Lock didn’t think so.
A former British Gas salesman, Mr. Lock was earning a basic salary of £14,670, which was topped up by the money he made from his commission (roughly 60% of his total pay).
When he took time off on holiday, no account was taken of the commission he would likely have earnt had he been at work, and he was only paid at the rate of his basic salary. For Mr. Lock, as for many other people whose majority of pay is made up by commissions, taking time off for holiday put him at significant financial disadvantage.
There is an EU Directive which says that employers must take into account commission when calculating holiday pay – by being part of the EU, the UK agrees to amend our laws so they comply with Directives. The argument here was whether UK law could be interpreted so it was compatible with the Directive.
Last year, the Employment Tribunal said it was possible. British Gas appealed this decision. The Tribunal dismissed the appeal.
It means that employers now must take into account any commission that would have been earnt by employees when calculating their holiday pay. Many companies could now face multimillion pound bills – Mr Lock’s was a test case brought on behalf of 918 other claimants, and it’s predicted thousands of others will bring similar claims against other employers.
On the other hand, it is undoubtedly good news for the many thousands of workers whose holiday pay doesn’t reflect their usual pay packet.
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