Mr Lock took a number of days’ holiday to which he was entitled, however, the remuneration paid to him during holidays consisted only of basic salary and any commission which had been earned earlier but happened to be paid at that time. Since he was not working he could not earn any commission while he was on holiday. He complained to the Employment Tribunal that that method of calculating his holiday pay was contrary to the requirements of section 221 of the Employment Rights Act 1996 and regulation 16 of the Working Time Regulations 1998 , as amended. He submitted that the domestic legislation could be, and therefore had to be, interpreted in a way which conforms to the requirements of Article 7 of the European Union’s Working Time Directive . There had previously been a reference made by the Employment Tribunal to the Court of Justice of the European Union, which held that Article 7 of the Directive requires results-based commission to be taken into account when calculating an employee’s holiday pay. In March 2015 the Employment Tribunal then held that it was possible to interpret the domestic legislation in a way which conforms to the requirements of the Directive by reading words into regulation 16.
British Gas subsequently appealed.
CIPP comment Although the Employment Appeal Tribunal (EAT) has at last handed down its decision in this case, employers are still left with uncertainty as the reference period to be used to calculate holiday pay still needs clarification. The CJEU did say in the Bear Scotland case that it is for the national court to assess the link between the various components which make up the total remuneration of the worker and that assessment must be carried out on the basis of an average over a reference period which is judged to be representative - leaving it somewhat open to interpretation. We remain hopeful that The Department for Business, Innovation & Skills (BIS) will be in a position to develop long awaited guidance once the outcome of further cases are decided later in the year.
The CIPP run a practical half day course which includes an overview of the legal framework that governs holiday pay and entitlement, as well as worked exercises to explore the calculations thoroughly. This course will always include the most up to date information to account for ongoing case law. Visit the training area of our website for full details.
CIPP Policy News Journal
25/04/2016, Page 127 of 453
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