Springhouse Solicitors

Lock v. British Gas: New decision on commission payments and holiday pay

This case concerns the commission payments received by an energy trader and how much he should be paid for his holiday. How did the Court of Appeal decide?

Background

This case is now becoming something of a long running saga with British Gas losing at every stage, yet fighting on.

So, yes, British Gas have now lost at the Court of Appeal stage. The case concerns one of British Gas’s energy traders who earned around 60% of his salary by way of commission. As he could not earn this commission while he was on holiday, his pay during holiday was less than it normally would have been.

UK legislation is quite clear that commission should not be included in the calculation for holiday pay, but the Employment Tribunal, Employment Appeal Tribunal and the European Court of Justice have all said that this is wrong. The Court of Appeal has now agreed with them all.

This means that holiday pay should reflect “normal remuneration” and therefore commission that would have been earned. This is required under Article 7 of the relevant European Directive, and the Court of Appeal found that UK Parliament must be taken to have wanted UK legislation to reflect the Directive in its entirety.

The main question in this case is whether UK legislation can be stretched far enough to be capable of being interpreted as stating that holiday pay should include commission payments. In the Court of Appeal’s opinion, yes it could.

Implications

Is this a case of re-writing UK legislation or stretching its interpretation? In the Court of Appeal’s opinion it was the latter, but most people “on the street” would say that this is effectively a re-writing of UK law which expressly excludes the inclusion of commission payments and holiday pay.

No doubt this case will now progress to the Supreme Court for a final say.