UK: EAT rejects appeal on inclusion of commission in holiday pay

The EAT gave its judgment on the appeal in Lock v British Gas Trading yesterday.  It upheld the tribunal's ruling that words can be written into the Working Time Regulations to comply with EU law and provide that commission is reflected in the calculation of pay for the 4 weeks' statutory holiday pay entitlement.  There was no reason to depart from the EAT ruling in Bear Scotland on the inclusion of pay for non-guaranteed overtime in holiday pay calculations.

British Gas is reported to have been granted permission to appeal to the Court of Appeal. The appeal has been listed to be heard over 11-12 July 2016, with a decision expected in the Autumn, so employers may therefore decide to hold off on changing their holiday pay practice until the outcome is known.  Respondents will presumably seek to have the stay on current tribunal cases extended and the current state of uncertainty will continue until the Court of Appeal judgment (not least as we still do not have a decision on the correct reference period and how the claim should be quantified).

Employers should note that the claimants in Bear Scotland have also been given permission to appeal to the EAT on the issue of the time limits on their deductions claims for holiday pay.  In August 2015 the tribunal rejected their arguments that: (i) the original EAT ruling (that underpayments prior to a gap of more than three months with no underpayment cannot be claimed as part of a series of deductions) was not a binding ratio of the decision; (ii) that they should benefit from the extension of time for claims which it was not reasonably practicable to have brought in time; and (iii) that the employer was required to make good all underpayments of holiday pay outstanding on the termination of employment in any event.