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Employers Brace For Holiday Pay Claims Following Landmark European Decision

The recent European Court of Justice decision in May in the case of Lock v British Gas has established that staff who receive part of their earnings in commission should have this taken into account when holiday pay is calculated, not merely basic pay.

This ruling held that it was a fundamental principle that during periods of statutory annual leave, workers should be put in a comparable position to periods when they are working.  To deviate from this would be contrary to the motivation of the Working Time Directive (Directive 2003/88/EC), which is to ensure that there are no deterrents from taking annual leave.

As such, the amount an employee receives as holiday pay should correspond to an employee’s usual rate of pay.

Whether this ruling helps set a precedent that could see other variables, such as regular overtime, be included in holiday pay calculations is yet to be seen.

The implications of this decision has unions preparing to help their members make claims, with Unite (an organisation with 1.4million members) producing a draft pro-forma letter for its officials to present to employers requesting information about employee’s holiday pay. Unite has additionally produced draft forms for members requesting legal assistance from the union in preparations of initiating claims. 

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