In Lock v British Gas Trading Limited, the Court of Justice of the European Union (CJEU) ruled those remunerated wholly or partly by way of commission are entitled to have this reflected in their holiday pay.
The case centred around a British Gas, Sales Consultant who took legal action against his employer because he only received his basic salary whilst on holiday, despite commission representing 60 percent of his monthly pay.
In finding for the British Gas employee, the CJEU stated: "Where such a worker is paid commission calculated on the basis of the sales that they make, that commission must also be included in the calculation of the holiday pay"
The Court took the view that lower holiday pay might discourage a worker from taking annual leave, thus violating the EU's Working Time Directive.
The decision is likely to have a significant impact upon employers. Not only will calculating future holiday pay be more complex, but significant claims for backdated holiday pay may be on the horizon.
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