The EAT has delivered its judgement in the British Gas and Lock case.

Readers will be aware that this test case involved a salesperson who received a basic salary and results-based commission. He received commission whilst on holiday as part of payments earned before the holiday but, because he had no way of earning commission on holiday, he received lower pay upon his return. He argued he should have had this average regular commission included in his post-holiday pay - to do otherwise flew in the face of the reasoning in Bear Scotland & Others v Fulton & Others [2015] ICR 221 in relation to overtime payments and acted as a disincentive for Mr Lock to take holidays. Such disincentives are unlawful under the working time Directive in relation to the four weeks' annual leave granted under the Directive.

The EAT has concluded in somewhat unsatisfactory language that "...the decision in Bear Scotland was not manifestly wrong." The EAT in Bear had already decided that the domestic Regulations could be read in a way that is compatible with the Directive and there was nothing in the present case of Lock that would cause the EAT to depart from that position.

At Legal-Island we are concerned that this decision does not really remove the uncertainty that exists. British Gas has already indicated that it intends to appeal to the Court of Appeal and there will be a lengthy delay. The present Lock judgement focussed largely on whether the courts could read the domestic Regulations as if compatible with the Directive rather than on what is 'normal' or 'regular' in relation to other payments that might legitimately be taken into account when calculating average pay for statutory holiday pay purposes.

Those issues were considered in Bear Scotland but not in this case where Mr Justice Singh concluded:

"...I have come to the conclusion that it would be inappropriate for me to reconsider the merits of the substantive argument, considered recently and at length by Langstaff J in Bear Scotland. If I were to accede to the invitation extended by Mr Cavanagh [Counsel for British Gas], however eloquently put, there would be nothing to prevent this Appeal Tribunal, if differently constituted, taking yet again a different view in a third case, perhaps in a year’s time. Furthermore it would in the meantime merely create uncertainty for everyone who has to apply the relevant legislation, including the Employment Tribunal, which is bound by decisions of this Appeal Tribunal. I agree with the submission made on behalf of the Secretary of State by Mr Tolley that, if Bear Scotland was wrongly decided, then it must be for the Court of Appeal to say so..."

In any event, whilst it is probably fair to say that, as the law stands, by approving the reasoning of the EAT in relation to overtime (and similar reasoning in relation to other regular contractual payments in British Airways plc v Williams [2012] ICR 847 (CJEU)), average commission should be included in the four weeks' annual leave under the Directive, these issues will continue to be raised in higher courts.

http://www.employmentappeals.gov.uk/Public/Upload/15_0189rjfhSMBA.doc