Holiday Pay and Commission
The recent case of British Gas v Lock has provided some clarification on the calculation of holiday pay.
Lock received a weekly salary and also commission based on sales made. Whilst on holiday, Lock would continue to receive commission based on his earlier sales. However, this meant his holiday pay following another period of holiday would be less as he would not, of course, be able to generate his usual amount of sales whilst on holiday. Lock argued his commission pay should reflect what he would usually be paid in commission whilst not on annual leave.
The tribunal confirmed that a week’s pay for the purpose of holiday pay, should be based on what the remuneration the employee received during normal working hours. In this case they calculated Lock’s entitlement based on average over a 12 week period.
The court did not expressly provide any guidance on exactly how it should in fact be calculated but did make it clear that normal commission must be considered when calculating holiday pay for those who are paid on a commission basis. The case highlights the need to consider carefully, how holiday pay is calculated. This is a complex area and employers are advised to seek legal advice.