Legal Issues – Holiday Pay Uncertainty to Continue

The uncertainty surrounding holiday pay looks set to continue for some time yet as the Employment Appeal Tribunal (EAT) issued its long-awaited decision in Lock v British Gas on 22nd February 2016.

The EAT has rejected the appeal made by British Gas against the Employment Tribunal decision that employers are obliged by the Working Time Regulations 1998 (WTR) to take into account results-based commission payments when calculating an employee’s holiday pay.

The EAT had recently decided in the case of Bear Scotland v Fulton (another holiday pay case concerning overtime) that our domestic law must be interpreted in a way that conforms to the requirements of the European Working Time Directive. In their appeal British Gas argued that the Bear Scotland case was distinguishable from Lock and did not apply to commission payments. The EAT rejected their grounds of appeal, stating that the tribunal had been right to follow the Bear Scotland approach and there were no exceptional circumstances in which the EAT should depart from that decision.

British Gas have sought leave to appeal to the Court of Appeal and it is unlikely it will be heard for some time. Unfortunately this does not make matters clearer for employers as notably the reference period for the purpose of calculating the commission or overtime element of holiday pay has still not been determined and further guidance is required on this. Therefore, it is likely that a number of holiday pay cases awaiting this decision will continue to be on hold pending the outcome of any appeal.

If you have any questions on any of the issues raised in the above article, please contact Lyndsey Saunders.

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