Holiday Pay Ruling

4 November 2016

Following on from the ruling in 2014 in British Gas v Lock where the European Court of Justice (ECJ) ruled that commission must be included in the calculation of paying holiday pay to staff, the case was heard in the Court of Appeal.

The Court of Appeal has now supported the ECJs ruling and member states of the European Union must ensure holiday pay is accurately calculated.

However, neither the ECJ or the Court of Appeal have clarified exactly how holiday should now be calculated and have left the mechanics FOR each government to consider.  To avoid any conflict with the UK Working Time Regulations 1998, the Court of Appeal had to consider a statutory interpretation of the WTR to allow commission to be included in the calculations.

The advice from the ECJ and Court of Appeal do not help in the calculation of entitlement, it is hoped that our own government will consider this latest ruling and support employers to understand what to do now.

Conclusion – when calculating holiday pay, employees are entitled to be paid an amount which reflects their basic pay plus taking any commission, overtime and bonus payments that they would have earned if not on holiday into the calculations.  

We will provide further updates on this complicated subject as soon as new information is available.