1 September 2014

By Camilla Belich.

The Leicester Employment Tribunal is due to consider the CJEU decision on commission payment during holiday this February.

On 22 May 2014, the Court of Justice of the European Union (CJEU) handed down their decision in Lock v British Gas. UNISON member Joe Lock was successful in his claim that paid annual leave should include commission payments if these were part of his normal pay.

The CJEU found that, during annual leave, a worker must receive their normal remuneration. This is because the purpose of holiday pay is to put the worker, in a situation which is, in relation to their salary, comparable to periods of work.

The commission received by Mr Lock was directly linked to his work and so formed a part of his normal remuneration for the purposes of Article 7 of the Working Time Directive. The Court found that due to the financial disadvantage he would suffer after taking annual leave, Mr Lock could be deterred from actually taking leave in the first place and this would be contrary to the purpose of the Directive. Approximately 60% of Mr Lock’s wages consisted of commission payments.

It now falls on domestic courts and tribunals to consider how the CJEU’s decision can be incorporated into existing UK law.

An initial hearing into this issue was due in October – however this has now been postponed to Febuary. This initial hearing will look at the effect of the CJEU ruling on Mr Lock’s claim and in particular whether the Working Time Regulations 1998 are capable of being read purposively so as to be consistent with European Law, or whether words should be added to the domestic legislation so that the calculation of a week’s pay is in conformity with European Law.

Providing Mr Lock is successful at this hearing, further dates have been set down for 23 to 26 March 2015. This latter hearing will look at practical issues including how the commission scheme/s at British Gas function, the reference period for the payments or how long they should go back, whether the CJEU decision applies to the minimum 4 week’s leave under European Law or 5.6 weeks leave allowed for under the Working Time Regulations 1998 and, in turn, quantifying Mr Lock’s claim and those of other Claimants whose claims are stayed pending the outcome of this case.

The success of Mr Lock with UNISON’s support may affect many thousands of workers paid partly on commission across the European Union. It is no surprise that the response to this decision has been overwhelmingly positive, with most people regarding it as a victory for fairness and common sense. Many have expressed surprise that some workers do not receive normal pay for periods of annual leave. But there has been some predictable scaremongering from the business lobby.

The reality is that many workers and businesses would be attracted to the UK due to the fair conditions for staff and the benefits of a healthy workforce that is not afraid or prevented from taking annual leave. After all, investing in the health and safety of staff and paying workers fairly for the few short weeks per year spent on annual leave is a basic human right.

Knee-jerk claims from the CBI that the sky is going to fall down prevent an opportunity for an open and grown-up discussion about pay and conditions. The CJEU will help to restore fairness to thousands of workplaces across the continent. And if the CJEU ruling puts more in the pockets of workers, the first sound you will hear is the ringing of tills on the high street.

The Chairman of Owen Pugh Group is reported as saying that liability for past underpayments could be “catastrophic” for business and that his company may struggle to survive. The reality though is that once the positive effect of this decision spreads through the economy, the next sound may well be Owen Pugh’s construction vehicles roaring to life on a significant new job.

UNISON therefore eagerly awaits the Lock v British Gas hearing at the Employment
Tribunal hearing on 20 and 21 October 2014.

The Court of Justice’s judgment is available on it’s website.