A landmark employment law ruling has created an immediate need for employers to address the way they pay staff during periods of annual leave.
At the end of March, a ruling in the European Court of Justice clarified that workers who receive commission as part of their pay are entitled to receive the benefit of that commission during periods of annual leave. Previously, employees would only be entitled to payment at basic rate whilst on holiday, with no account for loss of commission being made.
In the landmark ruling in the case of Lock vs British Gas, it was ruled that the payment of commission in a British Gas sales representative’s monthly pay was permanent enough to be regarded as part of his ‘normal salary’ and therefore, loss of such payments as a result of time taken off work for holiday was contrary to his rights. Employers throughout the region have therefore been seeking advice about the matter, with some already having faced backdated pay claims from employees.
This ruling is a landmark decision and will affect all employers who utilise commission payments as part of remuneration packages. Employees and employers that are affected by commission should seek advice at the earliest opportunity. Although the judgement is quite clear, there are quite complex rules applying to timescales for when employees can make backdated claims.
The subject of holiday pay had previously hit the headlines in November 2014 as a decision regarding holiday pay for workers who regularly undertook paid overtime was handed down by the Employment Appeals Tribunal. As reported in our blog at the time, in the case of Bear Scotland Ltd and others v Fulton, it was ruled that that voluntary overtime should count towards the calculation of holiday pay.
Following on from the two decisions, employers will need to review how they pay commission, overtime and holiday pay or else risk facing claims from employees.
For advice on holiday pay, commission payments, overtime pay and contracts of employment, please contact the employment law team at Farleys today on 01254 229800. The employment team at Farleys represent both employees and employer clients throughout the North West