Holiday pay and commission; latest Court of Appeal ruling re Lock v British Gas

This month, the Court of Appeal has concluded that holiday pay should reflect the normal remuneration of an employee, so where commission is the norm then it must be included in holiday pay.

The case is significant for any firm that has previously calculated holiday pay at an employee’s basic rate, as they will now need to calculate holiday pay based on all taxable pay.  This is applicable to all businesses and the implications could be significant for umbrella firms that pay employees a basic rate at NMW, plus a bonus relevant to the individual’s assignment.  The ruling implies that holiday pay calculations will now need to consider all taxable pay, not just the basic amount.  It is unclear what the reference period should be for calculating holiday pay, and the Department for Business, Energy and Industrial Strategy (BEIS) will produce guidance after the outcome of other imminent cases is known.  We will keep you informed of developments.

EY Employment Alert – Court of Appeal Confirms Approach to Holiday Pay – Read Newsletter > 

Published on: 18 October 2016 - By: FCSA

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