Calculating Holiday Pay – Update

In the case above, the employee received commission on his sales, rather than for the additional time undertaken. He could not, therefore, earn commission whilst on holiday. In calculating his holiday pay, the ECJ confirmed that UK law should ensure that a worker taking leave is paid by reference to payments that the worker would have earned if at work. Mr Lock was therefore entitled to include commission as part of his basic pay for the purposes of calculating his holiday pay. The UK Courts are yet to confirm, however, how such calculations would be made where the additional element of pay is variable.

The case re-affirms the principle highlighted last week that where a worker is paid a basic salary as well as variable elements directly linked to work, such as overtime or premiums, holiday pay calculations should include those variable elements.

If you would like to discuss your arrangements or related issues, please contact Kate Watkins on 0121 212 7494 or [email protected].

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