Breaking News -Lock v British Gas judgment on holiday pay and commission

The judgment in the case of Lock v British Gas has been decided in favour of the worker. 

We will keep you updated on what this means to employers, once we have more details and analysis of the ET’s report and findings.

However the ET has ruled, as expected, that if you are paid a basic salary and commission then commission should be included in the calculation of holiday.

With regards to where do you stand now on holiday pay, well below is an overview on the recent cases relating to this matter.

 Following the judgment of the Employment Appeal Tribunal (EAT) in the conjoined cases of Bear Scotland Ltd v Fulton and another, Hertel (UK) Ltd v Woods and others and AMEC Group Ltd v Law and others, in which it was decided that holiday pay calculations should include compulsory, non-guaranteed overtime, the Government announced that it would impose a cap of 2 years on backdated claims for holiday pay.

The announcement was the result of a taskforce, set up by the Department for Business, Innovation and Skills (BIS) immediately after the decision, to assess the impact of the decision in Bear Scotland on businesses. In imposing the cap, BIS declared that it was “taking action to protect UK business from the potentially damaging impact of large backdated claims” and to “give certainty to workers on their rights”.

The EAT in Bear Scotland ruled that claims for underpaid holiday could be brought as a series of claims for unlawful deductions from wages, but a break of more than 3 months between underpayments of holiday pay would break the chain and employers would not be liable for those earlier payments. The judgment left many employers fearing claims for holiday pay dating back to 1998, when the Working Time Regulations (the legislation which governs holiday entitlement) came into force. However, from 1 July 2015, such claims will be subject to a cap of 2 years. Claims brought in the meantime will be subject to the current rules.

Regulations are now in place to give effect to the decision to limit backdated holiday pay claims to 2 years.

The Unite union, which represented the workers in Hertel and AMEC (but not Bear Scotland), confirmed at the end of last year that those workers would not be appealing the EAT’s decision. We are not aware of there being appeals planned by any parties in the conjoined cases though there have been conflicting rumours since the decision.

These developments will ease, to some extent, the worries of employers who feared a flurry of holiday pay claims. It also provides a little more clarity for both employers and employees in a tricky and evolving area of law.

Posted: Mon 30 Mar 2015
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