Holiday Pay and Commission | Davis Blank Furniss Solicitors

The long awaited decision in a case of British Gas Trading v Locke & Another in the Court of Appeal has been handed down and employers in certain sectors are now counting the cost of what this means to their business.

The Court of Appeal has upheld the previous decisions by ET and the EAT confirming that the Working Time Regulations can be interpreted so as to include results based commission payments when calculating holiday pay for the four weeks annual leave provided by Regulation 13.

In summary, Mr Locke was employed in a sales position with a remuneration package of which commission formed 60%. This resulted in him receiving less pay following a period of annual leave because he had been unable to generate any sales whilst on holiday.

The European Court of Justice had held that his pay should be enhanced to reflect the commission that he would have been entitled but for having taken a period of annual leave. The case was then referred back to the Employment Tribunal to determine whether the Working Time Regulations could be interpreted to give effect to the ruling of the European Court of Justice.

Whilst the decision of the Court of Appeal is one that is technically arrived at, and adds very little to the position we were at two years ago, it is additional confirmation that when calculating holiday pay, employers need to ensure that workers receive an amount which reflects the commission they would have earned if they had not been on holiday. There is unfortunately no clarification whatsoever as to how the calculation should be carried out with most employers adopting a 12 week period.

The Court of Appeal did however indicate that its decision was limited to contractual results based commission.

Over the last two years there have been mixed reactions to this decision with some employers embracing the increased financial burden, others holding out to see how the Court decisions would pan out and others just sticking their heads in the sand! There is no doubt that the decision has far reaching financial impact in certain industries and some businesses may struggle to meet the additional costs this imposes.

If you need further guidance on the impact of this decision on your business, please contact Shiva Shadi, Head of Employment via e-mail to or by telephone on 0161 832 3304.


Read what our clients have to say...

View All

Excellent experience start to finish – always very responsive to any queries and the turnaround on the property I was buying was very quick, even in the busy time leading up to stamp duty deadline. Jenny was always very helpful and went above and beyond to close on a short timescale.

Ben Armitage

“Very approachable, practical solutions to problems, but most of all very responsive which I personally think is very important because if you need help, you need it quickly, or at least to know someone is looking at it for you”.

Joanne Rowe, Finance Director, Greater Manchester Chamber

“Always able to contact, very approachable, friendly and professional”

Nives Feely, JAM Recruitment

“I believe I have been able to establish a professional working relationship with everyone I have come into contact. Importantly, I sense the relationships which have been established give me the confidence that I can make contact with Davis Blank Furniss at any time and on any matter. I would also like to express my thanks to the very impressive “gatekeepers” who work in reception, not only for making me very welcome, but also for their professionalism”

Bill Pryke, CEO, Chartered Institution of Civil Engineering Surveyors

“Thank you for your efficient and friendly help throughout this process. We have had it easy but your approach has been part of that”.

Robert Amsbury (Conveyancing Client)

“I would like to take this opportunity to thank you personally for the ongoing support and assistance the firm has offered to our parents over the years. I hope also that we may be able to call on you if necessary in the future.”

Valerie Fisher (Probate Client)

“Jo always provides great service, understands our needs and delivers on her promises. Our needs are relatively simple but the complexity arises out of the volume of work and short time frames, Jo always delivers.”

Peter Fernandez, Corporate Director at Royal Bank of Scotland

“A big thank you to all who dealt with my wife’s claim… We would not hesitate to recommend Davis Blank Furniss to anyone that may be in a situation like we have been…”

Anon (Personal Injury client)

“Before putting my case in Kirsty (Morbey)’s capable hands I’ve met a couple of other solicitors. None of them listen to me as intently as Kirsty and showed me as much empathy and understanding as she did. Simultaneously she was able to look at my case from legal perspective, explain all the options and follow each of our meetings with written summary of the discussed matters (in timely manner). Her advice was invaluable and led me to successfully ending the case matter (hopeful for good). I’m forever grateful for he work and would definitely recommend her to anyone looking for reliable, knowledgeable and committed solicitor”.

Anon (Family client)
5 star service

Our Manchester office is rated 5 stars on Google