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Advocate General's opinion that holiday pay should include commission - Lock v British Gas Trading Ltd and others C-539/12
The Advocate General (AG) has issued an opinion that holiday pay of workers whose pay is made up of a fixed element and a regular commission (e.g. sales staff) should comprise both basic pay and an amount that reflects average commission (by reference to commission earned over a previous representative period). This opinion is predicated on the fact that Article 7 of the Working Time Directive is intended to enable a worker to actually take their annual leave entitlement and not be worse off as a result. Workers should not be discouraged from taking their leave entitlement for financial reasons.
Mr Lock was a sales consultant for British Gas who was paid a basic salary plus commission for sales made in the previous period. His commission equated to around 60 per cent of his total income. He was unable to make sales (and therefore generate commission) during his holiday and he therefore suffered a reduced income in the period following his return to work. He brought a tribunal claim for unpaid holiday pay which was stayed pending a referral to the ECJ to consider the question of whether holiday pay should include commission. The AG rejected British Gas's arguments that:
The AG considered previous European Court of Justice (ECJ) case law on this subject. Whilst his opinion is not binding on the ECJ, it will be influential when it comes to consider the case.
Employers who operate commission structures need to consider how they currently calculate commission in respect of holiday periods and how this decision is likely to affect them. If the ECJ agrees with the AG opinion, workers may be in a position to bring retrospective unpaid wages claims and this could represent a huge cost and administrative burden for employers.
[MENTION=26290]mariefab[/MENTION] & [MENTION=19071]teaboy2[/MENTION]
Advocate General's opinion that holiday pay should include commission - Lock v British Gas Trading Ltd and others C-539/12
The Advocate General (AG) has issued an opinion that holiday pay of workers whose pay is made up of a fixed element and a regular commission (e.g. sales staff) should comprise both basic pay and an amount that reflects average commission (by reference to commission earned over a previous representative period). This opinion is predicated on the fact that Article 7 of the Working Time Directive is intended to enable a worker to actually take their annual leave entitlement and not be worse off as a result. Workers should not be discouraged from taking their leave entitlement for financial reasons.
Mr Lock was a sales consultant for British Gas who was paid a basic salary plus commission for sales made in the previous period. His commission equated to around 60 per cent of his total income. He was unable to make sales (and therefore generate commission) during his holiday and he therefore suffered a reduced income in the period following his return to work. He brought a tribunal claim for unpaid holiday pay which was stayed pending a referral to the ECJ to consider the question of whether holiday pay should include commission. The AG rejected British Gas's arguments that:
- Mr Lock continued to receive commission already earned which fell due during his holiday period
- The sales targets were set to take into account holiday periods
- The rate of commission paid took into account the fact that workers could not earn commission during holiday periods.
The AG considered previous European Court of Justice (ECJ) case law on this subject. Whilst his opinion is not binding on the ECJ, it will be influential when it comes to consider the case.
Employers who operate commission structures need to consider how they currently calculate commission in respect of holiday periods and how this decision is likely to affect them. If the ECJ agrees with the AG opinion, workers may be in a position to bring retrospective unpaid wages claims and this could represent a huge cost and administrative burden for employers.
[MENTION=26290]mariefab[/MENTION] & [MENTION=19071]teaboy2[/MENTION]
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