Workers a step closer to including commission in holiday pay calculations

The Advocate General of the Court of Justice of the European Union (CJEU) today said that employees whose pay is commission based, should be entitled to holiday pay that includes their commission. The decision in thecase of Mr Z. J. Lock v British Gas, clarifies the correct interpretation of “paid annual leave” in Article 7 of the Working Time Directive.
The case was taken by UNISON the UK’s largest union, and it will now be determined by the full European Court.  The Advocate General is giving a clear signal that Mr Lock, an internal energy sales consultant, should be entitled to his commission payments when on annual leave.
Mr Lock took periods of annual leave for which he received his basic pay only and did not receive any payment for commission.  This meant that he would lose more than 50% of his average earnings for any period of annual leave.  As a result he would never take more than 5 consecutive days of annual leave.
UNISON General Secretary, Dave Prentis, said:
“This is an important case as commission is now a common feature of the pay package of workers in the United Kingdom and across the European Union.
“Today’s decision is a major step towards allowing workers who rely on commission as part of their regular income, to take a holiday without fear of falling into debt.
“It must be right for employers to take account of the hard work and success that workers’ have in selling their products and services, when it comes to calculating holiday pay.  We look forward to the full decision.”

On 12 September 2012, Mr Lock brought his claim against British Gas in the Employment Tribunal in Leicester, but prior to giving a final judgment they referred the question to the CJEU.
 Mr Z.J. Lock v British Gas trading limited was heard at the Court of Justice of the European Union on 13 November 2013.  UNISON argued that the domestic legislation must be interpreted so far as is possible to ensure that for workers on commission their pay during periods of annual leave corresponds to their normal remuneration.  Regulation 16 of the Working Time Regulations 1998 (“WTR”)  and/or the provision of a week’s pay in the Employment Rights Act 1996 should therefore be interpreted to achieve the result required by Article 7.

UNISON argued that a worker who is paid only commission would not be entitled to any holiday pay – which is impossible to reconcile with the fundamental social right in Article 7.  The union says that Article 7 requires that a worker earning commission as part of his /her normal remuneration is paid commission in respect of the four-week period of annual leave. It is not sufficient that s/ he is merely paid commission during annual leave. This is based on the fundamental principle that normal remuneration must be payable in respect of the period of annual leave, as set out in ILO Convention C-132.