Commission Must Be Included In Holiday Pay Calculation

02 July 2014

The European Court of Justice (ECJ) has ruled that commission payments must be included in holiday pay.

In the Lock v British Gas case, the ECJ found that where commission forms all or part of an employee’s pay, this must be taken into account when calculating their holiday pay.

Under existing regulations, all UK workers have the right to paid annual leave, on the basis of a week’s pay for a week’s leave. The ECJ ruled that as commission is intrinsically linked to an employee’s performance of the tasks carried out under their employment contract, it must also be taken into account in leave calculations.

Some experts have warned that the ruling will lead to additional complexities and increased expense for employers.