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Advocate General’s opinion suggests change in the calculation of holiday pay

30th January, 2014

Calculating an employee’s holiday pay can prove to be a tricky task where the employee does not work set hours or is paid on a commission basis. To this end, Advocate General Bot has provided guidance in the case of ZJR Lock v British Gas.

Mr Lock was employed by British Gas as a salesman and was paid a basic salary together with a sales-related commission. This meant that the amount of commission Mr Lock received varied from time to time and was, at all times, subject to the sales he made. Whilst on annual leave for a period of around two weeks, British Gas calculated Mr Lock’s holiday pay using only his basic salary.

Obviously it was impossible for Mr Lock to make any sales during his period of leave and as such he could not earn any of his usual commission. Advocate General Bot has suggested that the CJEU find that due to Mr Lock’s commission being intrinsically linked to the performance of his duties under his contract of employment, the commission should be taken in to account for the purposes of calculating holiday pay.

Advocate General Bot has suggested that it can be for member states to decide how much of the commission can be taken into account in this way but it must at least be considered.

We will await the CJEU decision in this case, bearing in mind that if Advocate General Bot’s recommendations are followed, there will be new authority for this topic and current case law will be overruled.

For further information on advice on how to calculate your employees’ holiday pay and consequence if you have incorrectly calculated holiday pay, please contact Claire Brook on 01244 405575 or send an email to [email protected].

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