February 22, 2016

Is Commission Included in Holiday Pay?

This post was written by: Ilinca Mardarescu

is commission included in holiday pay

The eagerly-anticipated decision in Lock v British Gas has just been received, which confirms that employers should take commission into account when calculating holiday pay for workers.

Lock v British Gas

Mr Locke was a salesman for British Gas and was paid basic salary and (results-based) commission. However, he was only paid basic salary when he was on annual leave, which meant his pay during any leave was substantially less than he would otherwise have received at work.

Mr Locke initially challenged this in the Employment Tribunal back in 2012.  The Employment Tribunal referred the matter to the Court of Justice of the European Union which ruled in Mr Locke’s favour, as did the Employment Tribunal when the matter was referred back to them.  British Gas appealed.

The Employment Appeal Tribunal today dismissed their appeal stating that pay for annual leave periods must include both commission and basic pay, if that is what is payable for the rest of the time.

Mr Locke was a member of UNISON and was supported in his case by them.  UNISON has approximately 700 cases stayed at the Tribunal’s awaiting this decision, and no doubt many more are in the same position independently.  

Commenting on the case UNISON General Secretary Dave Prentis said:

“This is a victory both for employees and for those that believe in fair pay. From the very beginning, UNISON has fought for workers to have their commission included in their holiday pay. This case will have implications for thousands of workers across Europe who for years have been denied a fair deal.

Employers nationwide will now have to revisit how they calculate workers holiday pay during any periods of leave.

So what does this now mean?

If as an employee you’re receiving payment that includes any form of commission; the amount you’re being paid from both basic pay and commission pay must be factored into how much you’ll get paid for Holiday. 

If you’re worried about how to legally implement these new changes or to make sure you’re receiving the legal amount of Holiday from your Employer do not hesitate to call our Head of Employment Ilinca Mardarescu on 01753 486 777


Head of Employment: Ilinca Mardarescu