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Holiday pay update: Court of Appeal confirms no change for results-based commission element

07/10/2016
This afternoon, the Court of Appeal's judgment in the ongoing British Gas v Lock litigation was handed down.

This was co-authored by Nadine Simpson-Ataha

This afternoon, the Court of Appeal's judgment in the ongoing British Gas v Lock litigation was handed down.  It confirmed, in a unanimous decision, that workers are still entitled to holiday pay which may include an element for results-based commission payments, for at least the basic four weeks' annual leave entitlement under the Working Time Regulations 1998.  In brief, it held: no change.

 This appeal turned on statutory interpretation and whether it had been open to the Tribunal to "amend" the 1998 Regulations under the "guise" of interpretation.  Commenting on this, in particular, Sir Colin Rimer held:

"this is a case in which the grain or thrust of the [Regulations] can fairly be identified as directed at providing holiday pay for workers measured by reference to criteria required by article 7 as since explained by the CJEU; and that, in line with that grain or thrust, the court can, and should, interpret the [Regulations] as providing that Mr Lock is also entitled to have his holiday pay calculated by reference to his normal remuneration.  To do so is to do no more than to interpret the [Regulations] as also requiring his commission earnings to be taken into account when calculating his holiday pay.  So to interpret the [Regulations] does of course require the implication into it of words necessary to make that meaning clear.  But so to imply such words is not a judicial exercise amounting to the repeal or amendment of the legislation. It is rather an example of the court performing its duty to provide a conforming interpretation to legislation introduced for the purpose of implementing a Directive."

Interestingly, questions raised during the appeal, as to how such a ruling might apply to different types of cases (for example, for the holiday pay of a salaried banker who receives a results-based annual bonus) bore no answers.  In fact, the Court explicitly stated that "nothing in this judgment is intended to answer them."

Thousands of similar claims have been stayed pending today's outcome.  And it is likely that they will remain so: British Gas has applied for permission to appeal to the Supreme Court so do watch this space.  

If you would like to discuss the impact of this decision on holiday pay for your organisation, do not hesitate to contact a member of our employment and pensions team.

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