Holiday pay, temp staff, zero hours contracts and pay calculations, employment law
In simple terms the Working Time Directive (WTD) stipulates that employees working unspecified hours (zero hours contracts amongst them) e.g. Agency Workers: should receive payments for holidays in proportion to and in addition to their earnings. This law originated with an EU court ruling which stated that for Health and Safety reasons, holiday pay must be paid on or for days when work did not take place i.e. days off.
British Gas decided this calculation did not include personal commission. The net result is: one of their then employees (of about a thousand who would receive extra payments) has taken them to court.
One of the questions is that: with Brexit do I need to bother with EU legislation? The simple answer is yes, the more complex answer is yes because the government approach to Brexit is to enshrine all EU legislation in UK law at the point of exit. So if it's law now: it will be post Brexit.
Cutting to the chase: On the 8th of October 2016 EAT (Employment Appeal Tribunal) decided that it was reasonable for an earlier Employment Tribunal (In November 2014) to insert wording into the Working Time Regulations 1998 (WTR) to the effect that commission and other similar payments are to be included in holiday pay.
Financially it’s fair to assume it’s worthwhile for British Gas to further appeal, with a 1000 plus other employees feeling hard done by. They have signified they intend to do this. Furthermore there is quite a backlog of appeals, so this will run and run.
The back ground:
Mr Lock was employed by British Gas as a salesman. His remuneration package included a basic salary plus commission which was based on the number and type of contracts he persuaded customers to enter into; in other words it was results-based commission and did not depend on how much work was done. He took a number of days’ holiday to which he was entitled. However, the remuneration paid to him during holidays consisted only of basic salary. He did not receive a proportionate payment of any commission which had been earned during the working time that generated the associate paid leave.