Holiday Pay and Unearned Commission – British Gas to Appeal

As anticipated, British Gas has lodged an appeal against the decision of the Employment Tribunal (ET) in Lock v British Gas Trading Limited and Others that the Working Time Regulations 1998 could be interpreted ‘purposively’ in order to achieve compliance with the EU Working Time Directive (WTD). This followed the decision of the Court of Justice of the European Union that Mr Lock’s holiday pay should include commission as any reduction in a worker’s remuneration in respect of his paid annual leave that would be liable to deter him from exercising his right to take that leave is contrary to the objective pursued by Article 7 of the WTD.

In reaching its decision, the ET expressed the view that there was no difference in principle between payment for non-guaranteed overtime (Bear Scotland Limited v Fulton) and payment in respect of commission so far as holiday pay was concerned, and was confident that its decision was in line with the underlying intention of Parliament to accurately transcribe the WTD into UK law.

The grounds for appeal against the ET’s decision are:

• The ET was wrong to conclude that the decision of the Employment Appeal Tribunal (EAT) in Bear Scotland v Fulton had any bearing on the decision in Lock; and

• The EAT had in any case erred in Bear Scotland in concluding that domestic law could be interpreted purposively in order to give effect to EU law.

For the time being, uncertainty on this issue prevails, therefore.

We will keep you informed of any developments on this important matter.

Meanwhile, employers affected by recent decisions on what constitutes ‘normal remuneration’ for the purposes of calculating holiday pay are recommended to seek advice on their individual circumstances.