ECJ Confirms Commission Must Be Included In Calculating Holiday Pay

Ruling On Salesman’s Case Provides Clarity


The European Court of Justice (ECJ) has handed down an important ruling  confirming that statutory holiday pay should be calculated to include any commission received on top of a basic salary.

The case of British Gas v Lock related to a salesman on a basic salary who was also paid commission in arrears which was dependent on his sales success.

In practice, the commission he received made up about 60 per cent of his take home pay.  Mr Lock went on annual leave between 19 December 2011 to 3 January 2012 and during this, he was paid his basic salary plus the commission from previous sales that fell due during the period.

However, as a result of having taken a holiday, Mr Lock suffered a reduced income in the months following his return to work because he was unable to earn commission during his holiday.

In reviewing the case, the ECJ was asked to determine if holiday pay should be calculated by reference to commission which would have been earned had holiday not been taken, and if so how this should be calculated.

The ECJ confirmed that holiday pay should include commission payments and that a worker should not be disadvantaged by taking annual leave.  However, it said that it was up to Member States to determine the precise nature of the calculation.

According to experts, the decision follows accepted principles that a worker who receives a basic salary and commission should get holiday pay which is comparable to normal pay.