What Should Be Included In Holiday Pay?
There has been a significant amount of cases addressing the question of what it is appropriate for an employer to pay for periods of statutory annual leave. The position is clear and straightforward where the employee receives a regular wage, or even if the hours or wage are irregular it is clear from the Working Time Regulations 1998 that average remuneration should be calculated over the previous 12 weeks prior to leave being taken. The position is more complex though when the employee/worker receives additional contractual payments as part of their remuneration to include bonuses, overtime and commission.
The Court of Appeal decision in the British Gas Trading Ltd –v- Lock and another case has now been reported. The Court of Appeal has upheld the Employment Appeal Tribunal decision that where an employee receives an element of results-based commission as part of their pay this should be included when they are on statutory annual leave. However, the case does not specify how this should be calculated.
We can advise on holiday pay cases both for employees and employers.
Jennifer Carpenter
Employment Law Specialist
Partner
