Deirdre Crowley in Crowley Solicitors has been observing developments in the UK in respect of the core pay issue regarding the inclusion of commission in the calculation of holiday pay. In this brief review, Deirdre brings readers up to speed in relation to a significant decision from the UK Employment Appeal Tribunal. The effect of the decision in British Gas Trading Limited v Mr Z J Lock & Secretary of State for Business, Innovation and Skills, is that UK employers are obliged to include commission in the calculation of annual leave pay.Â
Counsel for British Gas have made it clear that British Gas intends to appeal the Employment Appeal Tribunal decision to the Court of Appeal. If the matter is appealed, no positive action from UK employers is required, although all the signs are pointing in the direction of a positive obligation to include commission in the calculation of annual leave pay. The Employment Appeal Tribunal decision this week in Lock confirms the Tribunal’s own rationale in the separate cases involving Bear Scotland to interpret holiday pay claims broadly. The overall trend of the UK courts continues to be in line with a broad interpretation of Article 7 of the European Working Time Directive in respect of the calculation of annual leave pay.Â
The Tribunal’s finding this week means that Irish employers with UK based employees cannot rule out the payment of commission in their calculation of annual leave pay. The publication of the Employment Appeal Tribunal’s decision in Lock reinforces the UK courts’ willingness to include commission in the calculation of annual leave pay.Â
Potential impact of this trend from the UK and Europe for IrelandÂ
The implications of the decision for Irish employers are less dramatic than they are in the UK due to the manner in which holiday pay is calculated in this jurisdiction. The practice in Ireland in relation to the calculation of holiday pay is based on hours worked rather than salary based.Â
While the Organisation of Working Time Act 1997 and the Organisation of Working Time (Determination of Pay for Holidays) Regulations 1997 SI No 475/1997 (“the Holiday Pay Regulations”) do not expressly refer to commission as forming part of annual leave pay, commission is expressly referred to in an explanatory booklet in relation to the Organisation of Working Time Act 1997 from the Department of Enterprise, Trade and Employment. Explanatory booklets do not have legal effect but they may be taken into account by an Adjudication Officer or the Courts.Â
Based on Irish legislation, the Court of Justice’s decision in Lock and the broad interpretation given by the UK courts to Article 7 of the Directive, it is likely that Ireland will follow the broad interpretation given to annual leave pay.Â
The only certainty is that the important question of how commission and overtime are to be treated in terms of the calculation of annual leave pay will continue to attract judicial attention.Â
Full UK EAT Decision:
http://www.employmentappeals.gov.uk/Public/Upload/15_0189rjfhSMBA.docÂ
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