A landmark decision by The Court of Justice for the European Union has set a new precedent for the rules surrounding commission and holiday pay.
In the case of Lock vs. British Gas Ltd, the court ruled that commission must be reflected in the holiday pay of those whose total salary relies heavily on it.
Mr Lock’s entire pay award, including commission, must be taken into account when working out holiday pay, it was decided. The successful claimant was represented in court by trade union Unison.
Dave Prentis, general secretary of Unison, described the ruling as “extremely important”. He told HR Magazine: “This 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.”
Employment experts have said the ruling could have a major impact on sectors which employ a large number of commission-based workers such as retail.
As employees will be entitled to backdate their claims following the ruling, small firms could also be hit hard by the changes. In a bid to help such firms, the Government may consider implementing a limit on the period of time that claims are allowed to stretch back, experts have suggested.