Holiday pay ruling for commission paid staff.
Discussion
Just read there's been a ruling in the European Court of Justice saying commission payments should be included in holiday pay calculations for workers whose total pay usually includes an element of commission. Anyone know the full details of this? Whe n the ruling comes into place etc?/
pigeonskirt said:
Just read there's been a ruling in the European Court of Justice saying commission payments should be included in holiday pay calculations for workers whose total pay usually includes an element of commission. Anyone know the full details of this? Whe n the ruling comes into place etc?/
http://www.eef.org.uk/business-support/news-blogs-and-publications/news/2015/mar/holiday-pay-lock-v-british-gas-employment-tribunal-gives-judgmenthttp://www.rmif.co.uk/_assets/Holiday%20pay%20Lock...
You can Google British Gas V Lock if you want the full ins and outs.
British Gas have appealed the decision of The Tribunal though but the current position is that the law has been changed and employers must pay. However, the Tribunal has reserved an explanation of what reference period the commission based holiday pay should be paid over.
Its a bit of a mess at the moment and until resolved, it can only cause tension between employers and employees. Whatever you do, if this case effects you, dont be bringing it up ( if you have recently had or about to have holidays) as if you get into a row with your employer, you will have to fall back on the 3 months rule for actiion.
From rmif as the above link doesnt....
EEF > Business Support > News, blogs and publications > News > Holiday pay - Lock v British Gas – employment tribunal gives judgment
Holiday pay - Lock v British Gas – employment tribunal gives judgment
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Published 25 Mar 2015, 17:47
Gemma Taylor
Principal Adviser Email
The employment tribunal has ruled that UK law can be rewritten to reflect commission in holiday pay.
Background
Mr Lock was a British Gas Salesman who received commission for successful sales on top of basic pay. His holiday pay was based on basic pay only. Mr Lock argued that, whilst he was on holiday, he could not generate commission. He claimed that his holiday pay ought to reflect what he would have earned from commission during his holiday.
The employment tribunal referred to the Court of Justice of the European Union (the CJEU) the question of whether the UK was required to reflect commission in its rules for calculating holiday pay.
In a landmark ruling last year, the CJEU ruled that, as a matter of EU law, employees should have commission included in holiday pay. However, the CJEU declined to give a clear answer to the question of how this should be achieved, but instead remitted the case to the UK employment tribunal to resolve this question.
The Employment Tribunal has just published the first stage of its judgment on this issue. The issue of the correct reference period for calculating average commission and how much (if any) money is actually due to Mr Lock has been deferred to a later stage.
Decision
The judgment purely concerns the principle of whether the courts can re-write the UK rules on holiday pay in order to comply with EU law.
The ET decide they can re-write the UK rules to ensure commission is included. This is a similar conclusion to that reached by the ET and EAT in Bear Scotland (see EAT publishes holiday pay judgment) in which the courts ruled that UK law should be interpreted to reflect overtime in holiday pay.
The ET rule that Mr Lock should be treated as a “piece worker” for the purposes of the UK rules for calculating holiday pay. This has the effect that his holiday pay should be calculated according to his normal working hours at his average actual hourly rate of pay (including commission), instead of just basic pay. They reached this decision because it had already been agreed that Mr Lock had normal working hours for the purposes of the UK rules on calculating holiday pay.
The ET do not address the mechanics of how the calculation for Mr Lock will work in practice. The current rules for piece-workers apply a 12-week reference period, but the ET do not comment on this in today’s judgment. Instead, they defer the issue of whether this is the correct reference period in Mr Lock’s case to a later date.
Comment
This decision is not surprising, given that the CJEU has already ruled that commission must be included in holiday pay. Unfortunately, it does not take us much further in terms of addressing the practicalities of how to achieve this:
The case does not address what happens if a 12–week reference period is not a fair representation of what the employee would normally earn, or if it is administratively impractical because of your payroll system.
It does not look at how the calculation might differ for shift workers or those without normal working hours.
It is also unclear whether all commission schemes are affected. For example, what if your commission scheme is based on annual targets and you already take account of the fact that employees would be taking holidays when setting the targets? What if employees genuinely do not lose out on commission by taking their holidays?
The employment tribunal was also at pains to point out that this case does not concern the question of whether other types of reward (e.g. discretionary bonuses) ought to be taken into account when calculating holiday pay.
Companies should generally be including commission in holiday pay unless there is a good case for arguing that the commission scheme already compensates for holidays. That said, there is still room for much debate over the precise calculation method and its implementation in practice.
Edited by TVR1 on Sunday 17th May 18:20
So you get paid when you're at holiday and not working, but want more than their regular salary because if they were working, they might have done some overtime.
Surely most people take their holiday during the quietest season/time of year of their business, so with this judgement how will their pay be calculated to take into account the overtime/commission that they may or may not have done during their holiday?
Surely most people take their holiday during the quietest season/time of year of their business, so with this judgement how will their pay be calculated to take into account the overtime/commission that they may or may not have done during their holiday?
mgtony said:
So you get paid when you're at holiday and not working, but want more than their regular salary because if they were working, they might have done some overtime.
Surely most people take their holiday during the quietest season/time of year of their business, so with this judgement how will their pay be calculated to take into account the overtime/commission that they may or may not have done during their holiday?
rather than reading the OP and making a half cocked, irrelevant comment, why not do a bit of research and actually read BG V Lock. Surely most people take their holiday during the quietest season/time of year of their business, so with this judgement how will their pay be calculated to take into account the overtime/commission that they may or may not have done during their holiday?
Overtime was a different case.
If you dont understand why commission based employment and pay relates to being able to go on holiday and not suffer a lack of pay and therefore not want to go on leave..... You need to read a bit more.
TVR1 said:
pigeonskirt said:
Just read there's been a ruling in the European Court of Justice saying commission payments should be included in holiday pay calculations for workers whose total pay usually includes an element of commission. Anyone know the full details of this? Whe n the ruling comes into place etc?/
http://www.eef.org.uk/business-support/news-blogs-and-publications/news/2015/mar/holiday-pay-lock-v-british-gas-employment-tribunal-gives-judgmenthttp://www.rmif.co.uk/_assets/Holiday%20pay%20Lock...
You can Google British Gas V Lock if you want the full ins and outs.
British Gas have appealed the decision of The Tribunal though but the current position is that the law has been changed and employers must pay. However, the Tribunal has reserved an explanation of what reference period the commission based holiday pay should be paid over.
Its a bit of a mess at the moment and until resolved, it can only cause tension between employers and employees. Whatever you do, if this case effects you, dont be bringing it up ( if you have recently had or about to have holidays) as if you get into a row with your employer, you will have to fall back on the 3 months rule for actiion.
From rmif as the above link doesnt....
EEF > Business Support > News, blogs and publications > News > Holiday pay - Lock v British Gas – employment tribunal gives judgment
Holiday pay - Lock v British Gas – employment tribunal gives judgment
Subscribe to Business Support news feeds
Published 25 Mar 2015, 17:47
Gemma Taylor
Principal Adviser Email
The employment tribunal has ruled that UK law can be rewritten to reflect commission in holiday pay.
Background
Mr Lock was a British Gas Salesman who received commission for successful sales on top of basic pay. His holiday pay was based on basic pay only. Mr Lock argued that, whilst he was on holiday, he could not generate commission. He claimed that his holiday pay ought to reflect what he would have earned from commission during his holiday.
The employment tribunal referred to the Court of Justice of the European Union (the CJEU) the question of whether the UK was required to reflect commission in its rules for calculating holiday pay.
In a landmark ruling last year, the CJEU ruled that, as a matter of EU law, employees should have commission included in holiday pay. However, the CJEU declined to give a clear answer to the question of how this should be achieved, but instead remitted the case to the UK employment tribunal to resolve this question.
The Employment Tribunal has just published the first stage of its judgment on this issue. The issue of the correct reference period for calculating average commission and how much (if any) money is actually due to Mr Lock has been deferred to a later stage.
Decision
The judgment purely concerns the principle of whether the courts can re-write the UK rules on holiday pay in order to comply with EU law.
The ET decide they can re-write the UK rules to ensure commission is included. This is a similar conclusion to that reached by the ET and EAT in Bear Scotland (see EAT publishes holiday pay judgment) in which the courts ruled that UK law should be interpreted to reflect overtime in holiday pay.
The ET rule that Mr Lock should be treated as a “piece worker” for the purposes of the UK rules for calculating holiday pay. This has the effect that his holiday pay should be calculated according to his normal working hours at his average actual hourly rate of pay (including commission), instead of just basic pay. They reached this decision because it had already been agreed that Mr Lock had normal working hours for the purposes of the UK rules on calculating holiday pay.
The ET do not address the mechanics of how the calculation for Mr Lock will work in practice. The current rules for piece-workers apply a 12-week reference period, but the ET do not comment on this in today’s judgment. Instead, they defer the issue of whether this is the correct reference period in Mr Lock’s case to a later date.
Comment
This decision is not surprising, given that the CJEU has already ruled that commission must be included in holiday pay. Unfortunately, it does not take us much further in terms of addressing the practicalities of how to achieve this:
The case does not address what happens if a 12–week reference period is not a fair representation of what the employee would normally earn, or if it is administratively impractical because of your payroll system.
It does not look at how the calculation might differ for shift workers or those without normal working hours.
It is also unclear whether all commission schemes are affected. For example, what if your commission scheme is based on annual targets and you already take account of the fact that employees would be taking holidays when setting the targets? What if employees genuinely do not lose out on commission by taking their holidays?
The employment tribunal was also at pains to point out that this case does not concern the question of whether other types of reward (e.g. discretionary bonuses) ought to be taken into account when calculating holiday pay.
Companies should generally be including commission in holiday pay unless there is a good case for arguing that the commission scheme already compensates for holidays. That said, there is still room for much debate over the precise calculation method and its implementation in practice.
Edited by TVR1 on Sunday 17th May 18:20
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