The judgment itself is unremarkable but its impact is significant since this is the case in which it has been held that holiday pay should include provision for commission that would have been earned had the employee not been on holiday.
Mr Lock was employed from February 2010 by British Gas. His basic pay was £14,670. In addition he was contractually entitled to the benefits of a commission scheme. While on holiday he received only his basic pay. Sales were achieved in the categories of cold calls, hot leads and upgrades. In practice his commission payments greatly exceeded his basic pay. Commissions were based on the sales achieved rather than the amount of work done. He was entitled to 25 days’ holiday per annum plus public and bank holidays, during which time he could not earn commission.
The analysis of the relevant law in the judgment is comprehensive but what matters is how it works in practice following the European Court judgment. The way in which it has been achieved is by adding a new sub-paragraph (e) to Regulation 16(3) of the Working Time Regulations.
Regulation 16 provides as follows:
16.—(1) A worker is entitled to be paid in respect of any period of annual leave to which he is entitled under regulation 13, at the rate of a week’s pay in respect of each week of leave.
(2) Sections 221 to 224 of the 1996 Act shall apply for the purpose of determining the amount of a week’s pay for the purposes of this regulation, subject to the modifications set out in paragraph (3).
(3) The provisions referred to in paragraph (2) shall apply—
(a) as if references to the employee were references to the worker;
(b) as if references to the employee’s contract of employment were references to the worker’s contract;
(c) as if the calculation date were the first day of the period of leave in question; and
(d) as if the references to sections 227 and 228 did not apply.
New clause (e) provides:
(e) as if, in the case of the entitlement under regulation 13, the reference in section 221(2) and 221(3) to ‘the amount of work done’ read ‘the amount or outcome of work done’.
Accordingly, a tiny change has conveniently incorporated the European decision, provided Mr Lock with his extra entitlement (although he no longer works for British Gas) and has made the entitlement available to many other workers whose remuneration includes commission.
It is also worth bearing in mind that backdated claims are subject to a limit of two years with effect from 1 July 2015.