European ruling on holiday pay impacts travel firms
Travel firms may need to change their pay structures after the European court ruled that commission should be included in holiday pay.
In the case, Lock v British Gas, Mr Lock – a sales consultant – challenged British Gas when the company paid his holiday leave on his basic salary ignoring the commission he usually earned on top.
The European court found that the commission was ‘intrinsically linked’ to the performance of the worker’s tasks and must be taken into account when paying holiday pay.
It has left it for the UK Courts to decide how to determine ‘normal remuneration’ and the method of calculating the commission a worker should be entitled to during his statutory annual leave.
Jo Keddie, partner and head of employment law at Winckworth Sherwood said the ruling is likely to affect a significant majority of travel industry employees where commission is commonplace for rewarding staff.
She said: "It is of small comfort that this change will only affect entitlement to statutory holiday pay and not contractual holiday pay.
"Of key importance for travel businesses is the need to review commission schemes and, in particular, consider how closely or intrinsically linked commission payments are to their staff’s actual work and performance of their tasks.
"Some businesses may wish to change pay structures to make the commission element more discretionary."
Diane
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