Under the Working Time Directive workers are entitled to be paid their normal weekly pay in respect of each week of annual leave.
However, there has recently been some confusion as to what constitutes normal weekly pay.
In Lock v British Gas, the European Court of Justice (“the ECJ”) has stated that where commission is part of remuneration, the employee is entitled to receive both his basic pay and commission.
Mr Lock was paid a salary and commission based upon the outcome of his work. He took a period of annual leave and was only paid his basic salary; he subsequently lodged an employment tribunal claim. The matter was later deferred to the ECJ for guidance.
The ECJ advised that employers must take measures to ensure that a worker taking leave is paid by reference to commission payments that the worker would have earned if at work.
The ECJ declined however to advise on how this should be calculated and advised that member states should do this by reference to previous European case precedents.
The case reaffirms the previous position of the ECJ that employees should not be deferred from taking leave by reason of financial considerations.
It is now likely that an amendment may be made to legislation to reflect this decision.
Bearing this in mind, it may be prudent to look at your current policies as to payment during periods of annual leave.
For a free no obligation consultation on your current contracts of employment, policies and staff handbook, please call the employment team 0113 320 5000.
