The Case That Could Change UK Holiday Pay Forever

A recent tribunal case involving British Gas may be responsible for whether commission pay becomes included as part of holiday pay.

The case of Lock v British Gas Trading concerns British Gas employee Mr Lock, who in 2014 was found by the European court of justice (ECJ) to have had his commission payments wrongfully denied to him as part of his holiday pay. Evoking the Working Time Regulations 1998, Mr Lock argued that his holiday pay should include his basic salary along with a sum of money that represents the likely amount of commission he would have generated during this time should he have been working.

However, British Gas appealed the controversial decision in May 2015 by arguing guaranteed overtime should not be offered as part of holiday pay, at least not in all cases. British Gas’s legal team explained: “After considering the decision of the tribunal very carefully, we decided to appeal against it […] we continue to talk to the trade unions about how best to approach holiday pay in the future.”

Should the appeal, which is due to take place early next year, prove successful it could result in a major change to UK employment law that would show UK law to be incompatible with EU law. If this proves true, the British government will be under considerable expectation to alter its current pay legislation.

There are however a number of other important factors to consider before any changes can be made, such as whether other forms of additional payment like bonuses and voluntary overtime should be taken into consideration. A necessary reference period for calculating such payments will also need to be judged.

However, if the Employment Appeal Tribunal (EAT) rules in British Gas’s favour it will be confirmation that the EU’s regulations are incompatible with British law and that new legislation must be introduced. Any new ruling on commission pay will only be able to take into account cases launched from the date of the law changing. Existing cases will not qualify for review but may be eligible for review at a later date.

Should the appeal by British Gas prove unsuccessful, the EAT’s ruling will remain in favour of Mr Lock and commission will now need to be included in calculations of holiday pay. A second tribunal will also be needed in order to determine how to compensate Mr Lock, including judging how long the referencing period should be.

Furthermore, if the appeal is squashed, there will likely be a large number of other employees coming forward to voice their own similar concerns. This could initiate legal proceedings that might take years to be heard in full.