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This article was published on July 18th, 2014
After months of speculation and anticipation, the Court of Justice of the European Union (CJEU) has spoken. It’s now clearly the case that where a worker’s pay includes an intrinsic element of commission, that commission must be taken into account when calculating their holiday pay.
Mr Lock was a salesman who earned commission based on hours worked and sales achieved. He had brought a holiday pay claim for commission he would have earned if he’d been working, but which he couldn’t because he wasn’t. This launched the big question of whether commission should form part of ‘basic pay’ in holiday pay calculations.
Most definitely, the CJEU has said. It’s now down to the UK courts to implement that decision and to decide how holiday pay should actually be calculated.
Employers – it’s time to act. Review your contracts and policies and make sure that holiday payments now incorporate the variable elements of a worker’s pay. It won’t be straightforward and it will take some time and careful consideration, but it’s unavoidable.