Holiday Pay – The Court of Appeal Judgement in British Gas v Lock

10 Oct 2016

The long awaited judgement of the Court of Appeal was given on Friday. The Court has followed the guidance of the CJEU and the gist of it’s 38 page decision is that workers holiday pay should reflect the commission they’d have earned if they weren’t on holiday. It also describes the muddle we’ve all been dealing with as the unforeseen consequences of the CJEU’s interpretation of Article 7 of the Working Time Directive; an interpretation which came after our own Working Time Regulations.

So how do you calculate holiday pay? The Court said this:

“… in the course of the argument, there was some discussion about how a conforming interpretation of the WTR might apply to different types of case. The court was, for example, exercised by the case of the salaried banker who receives a single, large results-based annual bonus in, say, March. Is he entitled on his summer holiday to leave pay including an element referable to his bonus? And how does or ought the WTR deal with the type of worker who is employed on terms like Mr Lock’s, but who only becomes entitled to commission at the point in the year when a particular level of turnover, profit or other threshold is reached, which may mean he receives no commission for some months of each year? Other types of cases will raise other questions.

115. My response to questions such as these – and to others covering other situations – is that nothing in this judgement is intended to answer them. It is no part of this court’s function to do more than to deal with the instant appeal. In the case of the banker example, there may indeed be a question as to what his ‘normal remuneration’ is, and whether its calculation ought to reflect the fact of his annual bonus, and if so, how. There may also be questions as to what, in any particular case, is the appropriate reference period for the calculation of the pay. I say nothing about any of that.

116. This judgement is, therefore, confined to Mr Lock’s case…”

To answer my question; it depends on the facts of the case.

My colleagues and I will be happy to help you apply the judgement.