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Another development regarding whether holiday pay should include commission

In the on-going saga as to whether holiday pay should include commission, the Court of Appeal has held that the UK Working Time Regulations 1998 can be interpreted as including holiday pay in respect of commission. This is another important development as the wording of the Employment Rights Act 1996 says that it can’t.

The employee was a salesman on a basic salary with variable commission paid in arrears. His commission depended on the outcome of his work, in other words the sales he achieved. As such, he did not earn commission when on holiday and his holiday pay was therefore less than his normal income.

Unfortunately, the court expressly opted out of addressing the question of the appropriate reference period to calculate the commission element of statutory holiday pay. It is understood that British Gas intends to apply for leave to appeal to the Supreme Court. It is hoped that the Supreme Court will take the opportunity to provide greater clarity for employers on this issue.

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