The issue of whether holiday pay should be bumped up to include additional benefits to go towards commission payments goes to an employment tribunal this week.
The case focuses on a former sales employee of British Gas. In 2014, the European court of justice (ECJ) ruled that the salesman, whose salary included significant commission payments, should not be financially disadvantaged by the fact he could not earn commission during his holiday.
The ECJ concluded the employee’s commission was directly linked to the work he carried out and had to be taken into account when calculating holiday pay.
However, British Gas appealed against this decision in May, questioning its link to a case that involved non-guaranteed overtime payments rather than commission payments.
“After considering the decision of the tribunal very carefully, we decided to appeal against it,” said Lucy Lindstrom, head employment lawyer for British Gas. “In the meantime, we continue to talk to the trade unions about how best to approach holiday pay in the future.”
If the appeal is successful, it may lead to a declaration that UK law is incompatible with European law and the government will be under pressure to amend the law.
If British Gas is unsuccessful, the case will be listed for a further hearing to determine how much the former British Gas employee is entitled to receive to compensate him for the reduction in his income over his two-week holiday.
Glenn Hayes, employment partner at the law firm Irwin Mitchell, said: ““The outcome here will be of interest to other employers with similar commission schemes and if the appeal is unsuccessful, it shouldn’t be long before some guidance is available on the appropriate reference period for any calculation and the rate of holiday pay.
“Different companies operate different commission arrangements and although the end is potentially in sight for this case, it is important to stress that there are many other schemes that do not neatly fit into this pattern. At this stage, the only certainty for these businesses on the issue is more uncertainty.”
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