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The Employment Appeal Tribunal has today, Monday 22 February 2016, ruled in favour of the defendants (UNISON) in the British Gas Trading Limited v Lock & Secretary of State for Business, Innovation and Skills Case.
The basis for the original claim by Mr Lock, which was first heard by the Employment Tribunal (ET) back in April 2012, was the the fact that Mr Lock was only paid his basic pay when taking annual leave despite the fact his overall remuneration package included a basic salary plus commission, meaning his pay during periods of annual leave was significantly less during period of annual leave.
The original Employment Tribunal referred the case to the Court of Justice of the European Union (the CJEU) and in doing so asked the question – Is the UK required to reflect results based commission in its rules for calculating holiday pay. The CJEU answered with a resounding YES and referred the case back to the Employment Tribunal who in turn ruled in favour of Mr Lock.
British Gas duly appealed the decision, however today the EAT dismissed their appeal and ruled in favour of Mr Lock / UNISON that remuneration for periods of annual leave must include both basic pay and results based commission, reaffirming that it is necessary to imply words into the UK Working Time Regulations to comply with EU law.
UNISON are supporting another 700 claims that were stayed pending the outcome of this case.
The implication of this ruling for Employers is that they must, when calculating workers’ remuneration for periods of annual leave, include both basic pay and results based commission.
Many Employers adopted a pro-active approach following the previous rulings and adjusted the way they calculated workers’ remuneration, thus breaking the any chain of deductions for underpaid holiday pay. Some initiated a contingency plan and began accruing funds to cover any future liability that may arise as a result of an unsuccessful appeal.
However, many Employers instead chose to do nothing pending the outcome of this appeal and may now find themselves exposed to multiple holiday pay claims as a result of today’s decision.
On a positive note, the ruling set out by the EAT in the related Bear Scotland v Fulton case (Overtime and Holiday Pay), set out that claims for unpaid holiday pay can’t go back for more than 3 months, which may give some comfort to Employers.
The Government has also introduced legislation to limit any claims submitted from 1 July 2015 onwards from claiming a maximum of 2 years' back pay for any underpaid holiday pay.
Employers concerned about how this ruling might impact them can take advantage of EmployEasily Legal Services free consultation service - contact us today to arrange your free consultation.