The Supreme Court has refused energy organisation British Gas permission to appeal in a case centring around the inclusion of commission in holiday pay.
In a decision made on Tuesday 28 February 2017, the Supreme Court did not grant the energy organisation the right to appeal in the British Gas v Lock case, following the Court of Appeal's October 2016 confirmation that holiday pay calculations should include a representative amount of commission-based pay.
The case was originally brought to an employment tribunal by Lock, an ex-sales consultant for British Gas, who stated that he was underpaid holiday pay, as it was calculated according to his basic salary without taking into account the commission he would usually earn.
The European Court of Justice (ECJ) found that under working time regulations, Lock would be entitled to have his holiday pay calculated based on his normal remuneration, which would include taking into account commission payments. This decision was agreed by the Employment Appeal Tribunal (EAT) in February 2016 and upheld by the Court of Appeal in October 2016.
A British Gas spokesperson said: "It was important to get a definitive ruling on this issue from the courts and we now have this. We have been in discussions with our trade unions and will continue to engage with them on the calculation of holiday pay for affected employees and to seek a resolution of outstanding claims."
Dave Prentis, general secretary at trade union Unison, said: “It’s taken nearly five years to get here, but now all employees who earn commission will see that reflected in their holiday pay. Until now, many whose wages included commission lost a lot of money whenever they took a holiday. Many simply couldn’t afford to go away. [The] decision puts right that wrong.
“But this is an employment right based on a European directive, something that could well disappear once the UK finds itself outside the [European Union]. The government must prove it’s on the side of ordinary workers by showing how it’s going to protect all rights such as these.”
Glenn Hayes, partner at Irwin Mitchell Solicitors, added: “This really is the end of the line for British Gas and they will have to compensate Mr Lock, and approximately 1,000 other employees waiting in the wings who have suffered similar losses. The principles involved have already been determined by the European Court of Justice and all that remains is for the Employment Tribunal to determine what compensation should be paid by British Gas to ensure that workers like Mr Lock are not disadvantaged by taking a holiday. This is likely to be done by averaging his pay over a given reference period which it will have to determine.
“This case is likely to attract a considerable amount of publicity and we are likely to see more [employees] attempt to challenge the amount they are paid when they take a holiday. However, this decision does not mean that everyone who receives commission will be entitled to have this included in their holiday pay. The Court of Appeal made it very clear that its decision in Lock only applied to ‘results based’ commission schemes. It is therefore not a panacea for all commission schemes to be included."
