The Employment Appeal Tribunal (EAT) is to hear a case regarding holiday pay from British Gas and whether it should reflect commission normally earned rather than just basic pay.
Companies across the UK will be watching this week’s case with interest as it could mean millions of workers will pocket higher holiday pay.
The case of Lock v British Gas, which will be heard by the EAT in London, could bring employers a step closer to receiving some certainty over the position regarding commission and holiday pay, as well as result in some practical guidance regarding how to calculate holiday pay from the tribunal.
In 2014, the European court of justice (ECJ) ruled that the British Gas salesman, whose salary included significant commission payments, should not be financially disadvantaged by the fact he could not earn commission during his holiday.
The ECJ concluded the employee’s commission was directly linked to the work he carried out and had to be taken into account when calculating holiday pay.
British Gas appealed. “After considering the decision of the tribunal very carefully, we decided to appeal against it,” said Lucy Lindstrom, head employment lawyer for British Gas. “In the meantime, we continue to talk to the trade unions about how best to approach holiday pay in the future.”
A spokesman for the firm added: “British Gas is now appealing the [employment tribunal] decision on two grounds:
- Commission and non-guaranteed overtime are dealt with under different provisions, which use different language, and the tribunal incorrectly concluded that Bear Scotland, a case about overtime, had any bearing on the outcome of Lock.
- In any event, the EAT in Bear Scotland incorrectly concluded that our domestic legislation could be interpreted purposively to give effect to EU law.”
If British Gas is unsuccessful, the case will be listed for a further hearing to determine how much the former British Gas employee is entitled to receive to compensate him for the reduction in his income over his two-week holiday.
The decision could have a pivotal impact on future holiday pay claims from employees working under similar commission schemes.