In a landmark ruling made last week, the European Court of Justice (ECJ) has decreed that salespeople must receive “normal remuneration”, including their basic salary and commission, while they are on holiday, overruling UK law.
The ruling came in a case brought by a worker at British Gas, who took the energy company to court for only paying him his basic salary while on holiday over the Christmas period in 2011.
The employee, referred to during the case as Mr Lock, argued that he was entitled to claim holiday pay, as not making any sales during the Christmas period meant that his salary in the months afterwards would be adversely affected, as that was when British Gas paid its commission. This would have been particularly crippling, as his commission made up some 60 per cent of his monthly wage.
According to the Court, this adverse financial impact might deter a worker from taking leave at all, which is contrary to the objective pursued by the Working Time Directive, so ruled that where a worker is paid commission calculated on the basis of the sales they make, that commission must also be included in the calculation of holiday pay.
The ruling will impact on any UK firm employing salespeople who are paid commission, as the ECJ ruled that this law must apply to all 28 member states, although individual countries can decide how high the commission paid during holidays should be.
There are fears of a rash of claims following the ruling, which in the UK could be worth “hundreds of millions” of pounds according to the Confederation of British Industry (CBI), particularly since claims could be backdated by at least five years.
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