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Thursday 27 October 2016
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Holiday commission pay rumbles on leaving recruiters still in the dark

Tue, 23 Feb 2016

The Employment Appeal Tribunal (EAT) has rejected an appeal against an Employment Tribunal ruling made last year that could have major implications for recruiters in how they calculate consultants’ holiday pay.

The Lock v British Gas case followed a claim made by an energy adviser after he took a two-week holiday during which he was only paid his basic salary and not his sales commission. The commission would normally make up a large part of his total remuneration. 

The European Court of Justice decided that the claimant’s sales commission was directly and intrinsically linked to the performance of the tasks of his job and therefore should be included in his holiday pay. 

British Gas made an appeal to the EAT in December. Yesterday, EAT rejected that appeal.

The ruling means employers, including recruitment agencies, need to factor in commission payments when making holiday pay calculations.

However, according to Kirsty Ayre, employment partner at Irwin Mitchell, the ruling does not mean employers will have to include all commission payments made to staff in their holiday pay. “The Tribunal made it clear in earlier cases that the requirement to include overtime in holiday pay only applies to the first 20 days of leave taken in any year, and not to any additional statutory or contractual leave,” Ayre said in a statement. “This principle will apply to commission payments.”

Eversheds, the employment law firm acting on behalf of British Gas, has asked permission to take the case to the Court of Appeal for a definitive ruling.

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