The Court of Justice of the European Union has recently given its decision in a case concerning commission payments and the calculation of holiday pay under the Working Time Directive. The case was referred to the European Court by a UK employment tribunal.
The case had been brought to tribunal by Mr Lock, who was employed by British Gas as an Internal Energy Sales Consultant. His monthly pay included a basic salary plus commission payments, which were based on sales made by him in previous months.
When Mr Lock took annual leave, his pay for the period included his basic salary plus commission he had previously earned. However, because he didn’t generate any sales during his period of leave, his pay in the months after his holiday was substantially reduced.
Mr Lock therefore brought an action to the employment tribunal to claim the remainder of his holiday pay to which, in his view, he was entitled for the period of his leave.
The tribunal referred to the case to the Court of Justice, asking whether, in such circumstances, the commission which a worker would have earned during his annual leave must be taken into account in the calculation of his holiday pay and, if so, how the sum payable to the worker must be calculated.
The Court has now ruled that where a worker is paid commission calculated on the basis of the sales that they make, that commission must also be included in the calculation of the holiday pay.
In terms of calculating holiday pay, the Court said that it must, in principle, be determined in such a way as to correspond to the normal remuneration received by the worker.
It also observed that it is for the national court or tribunal to assess whether the methods of calculating the commission payable to a worker such as Mr Lock, in respect of his annual leave, comply with the aims of the Working Time Directive.
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