British Gas’s appeal against the Employment Tribunal’s decision that holiday pay should include compensation for lost commission has now been heard by the European Court of Justice. Here is how the English Courts responded.

Background

Whether or not commission should be payable as part of holiday pay where the worker is unable to earn it turns on the definition, in English law, of “week’s pay”. European law said that this should include commission payments. UK law said quite the opposite.

The Employment Appeal Tribunal in this case reconciled the difference in favour of the European interpretation, effectively re-writing the Employment Rights Act 1996, and holding that commission payments should be included in statutory holiday pay.

This approach was supported by the case of Bear Scotland, which took a similar approach to re-writing UK legislation and held that non-guaranteed overtime should be included in holiday pay.

In this case, the EAT followed the Bear Scotland decision, as well as the edict of the ECJ, formally finding for the first time that holiday pay should include commission.

Implications

This decision will be appealed to the Court of Appeal, it seems, leaving matters somewhat up in the air still. Apparently there are thousands of cases currently waiting to be heard in the Employment Tribunal on this point.

The principal matter which is left undecided is the method of calculation that should be applied to find out how much commission is owed. Commission payments may be very erratic and varied. As the law currently stands, the averaging period should be a “representative normal period”, but no one yet has certainty as to how long this should be.