British Gas v Lock: UK Supreme Court Refuses to Give British Gas Permission to Appeal

    View Authors March 2017
    This week, British Gas has been refused permission to take its appeal to the Supreme Court. This means that the Court of Appeal’s decision stands, namely that results-based commission should be “taken into account” for the purposes of the four weeks’ leave derived from the Working Time Directive where it forms part of a worker’s “normal remuneration”.

    This case should now return to the Employment Tribunal for it to decide what compensation should be paid to Mr Lock; although, we understand that the parties have agreed that this should be calculated by reference to his average remuneration over the 12 weeks before the calculation date and the Tribunal seems wildly unlikely to require anything different.

    We now have clear authority that results-based commission, non-guaranteed overtime and certain allowances should be taken into account for EU-derived holiday pay purposes. Some questions still remain unclear, such as what the correct reference period is for calculating holiday pay (i.e. exactly how commission and overtime, etc., should be taken into account) and how to deal with commission payments which are occasional or irregular, but this should not stop those employers who have been holding off from making any changes to their holiday pay arrangements in light of the outcome of this appeal from now reviewing their commission arrangements. In particular, this development does not undermine the argument that any extra holiday pay to take commission earnings into account should be conditional on the employee showing that he or she would have made those extra earnings were it not for the holiday taken.

    If you would like to discuss what this latest decision means for your business, or if you are considering making drafting changes to your commission arrangements, please speak to your usual contact or a member of our Holiday Pay Taskforce.