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The Lock Decision – Impact on Holiday Pay

by Published on

The basic facts are: –

Mr Lock was a salesman on a basic salary with variable commission paid in arrears. His commission depended not on the time worked but the outcome of that work, sales achieved. He could not earn commission whilst on leave and lost commission (income) by taking leave. He brought a claim for his lost holiday pay.

As you know, the ECJ issued various pearls of wisdom in a Decision last year. Following that case, the Leicester Tribunal has indeed decided that Mr Lock’s holiday pay should include an element for his commission. Effectively, it has done so by inserting new words into Regulation 16 (3) of the Working Time Regulations 1998.

The new words are thus: –

“(e) As if, in the case of the entitlement under Regulation 13, a worker with normal working hours whose remuneration includes commission or similar payment shall be deemed to have remuneration which varies with the amount of work done for the purposes of Section 221”.

This impacts on future holiday pay entitlement.

The impact on back claims is reduced by the 2 year cap on backdated claims which takes effect on 1 July 2015. That limitation is applied by the “Deduction from Wages” (Limitation) Regulations 2014, which came into force on 8 January 2015. These Regulations apply to all Tribunal claims post 8 July 2015 and specifically cover holiday pay.

What of the period up to then? That is still up for debate, and it may be there is a last minute rush of cases in various sectors, to get claims submitted before the deadline. I doubt it, but there is always that possibility.

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