UNISON wins landmark decision for workers to have commission included in holiday pay

UNISON has today won a landmark case that could pave the way for employees whose pay is commission based to be entitled to holiday pay that includes their commission.

The Court of Justice of the European Union (CJEU) ruled that workers must receive their normal remuneration for annual leave which must include both commission and basic pay. The judgment has important implications for all workers whose pay includes supplements, such as commission, bonuses and overtime payment, which are not paid in respect of their annual leave.

The case, Mr Z. J. Lock v British Gas, was taken to an Employment Tribunal in Leicester in 2012. Mr Lock, an internal energy sales consultant, argued that he should be entitled to his commission payments taking periods of annual leave because commission formed part of his normal pay. 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 was losing more than 50% of his average earnings during periods of annual leave.

The Employment Tribunal referred the question to the CJEU before giving its final judgement.

The CJEU has today ruled that such a reduction in holiday pay is liable to deter a worker from taking annual leave, which is contrary to the Working Time Directive.*

UNISON General Secretary, Dave Prentis, said:

“This is an extremely important decision that will assist workers across the European Union to argue that they should be entitled to their normal pay, including any commission payments they normally receive, for periods of annual leave.”

The case will now be referred back to the Employment Tribunal to determine what annual leave payments Mr Lock is entitled to under UK law.


Notes to Editors

*The Working Time Directive provides that every worker has the right to paid annual leave of at least four weeks. 

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.