A recent court case, Lock
v British Gas, has highlighted the uncertainty around holiday pay for those
who achieve commission on top of a basic salary.
Most likely to be affected are those who work in the IT
industry where a commission structure is a common addition to basic staff
salary. European legislation states that every worker is entitled to paid
annual leave and under the UKs Working Time Regulations a worker is entitled to
be paid a week’s pay for each week of statutory annual leave.
Jo Keddie, partner and Head of Employment law at Winckworth
Sherwood, said: “This, however, begs the question – what amounts to normal week’s
pay for statutory holiday periods? Is it just basic pay or should it be the
actual or average amount of commission received by the employee and, if it is
the average, over what period?”
The European Court has left it for the UK Courts to decide
how to determine ‘normal remuneration’ and the method of calculating the
commission a worker should be entitled to during his statutory annual leave.
Jo Keddie continues: “Inevitably this will make holiday
calculations far more complicated and expensive to process in an area already
fraught with technical payroll calculations. It is of small comfort that this
change will only affect statutory holiday pay and not contractual holiday pay”
Winckworth Sherwood is a diverse and dynamic law firm
committed to providing its clients with market leading advice that helps them
to achieve their objectives.
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