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In 2014 the European Court of Justice (ECJ) confirmed that holiday pay for workers who normally earn commission must include basic pay plus a sum to reflect the commission that a worker would have earned had they not taken annual leave. For further details of the key case that brought about this development (Lock v British Gas) please see our original article (read more).
Following on from the ECJ’s decision, the Employment Tribunal in Lock has now handed down its judgment. The Tribunal has held that where a worker normally earns commission, their employer must calculate holiday pay on the basis of the worker’s average rate of remuneration (including commission) during the 12 week period immediately before the holiday.
This requirement only applies to the four weeks’ holiday which UK employees derive from the EU Working Time Directive. Once that four weeks’ holiday (including bank holidays) has been used, any further paid holiday during the same holiday year does not have to include a sum relating to commission. Employers should consider amending their employment contracts to make this position clear.