Commission must be included in holiday pay calculations

David Reid
27th Jun 2014

The European Court of Justice (ECJ) has decided that employees in the UK are entitled to have any commission they regularly earn taken into account for the purposes of calculating their holiday pay. This decision appears to overrule previous contrary judgments in the UK appellate courts.

 

The case, which involved British Gas, will now return to the UK employment tribunal, who will have to decide whether it is possible to read extra words into the relevant UK legislation to make it compliant with the ECJ’s judgment. This exercise of linguistic gymnastics is, unfortunately, one that the UK courts and tribunals are being asked to perform all too often in relation to the Working Time Regulations and the provisions of the Employment Rights Act that govern the calculation of a week’s pay.

 

You can read the judgment here.

 

The Employment Appeal Tribunal is due to hear a case next month on a very similar issue, namely whether the relevant UK legislation can be interpreted to give employees the right to overtime payments being included in holiday pay calculations, again as deemed necessary by the ECJ.

 

While employers may not relish the prospect of UK law being amended to give effect to the very much employee-friendly rulings on rights to paid holidays emanating from Europe, it is now high time that all stakeholders have more certainty as to their rights and obligations in this important area of employment law.

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