Staff Entitled to Holiday Commission

By June 5, 2014Legal Update
Holiday Pay

British sales staff can now expect to receive their commission whilst taking annual leave, thanks to a ruling from the Court of Justice of the European Union which will change employment law within the UK.

Sales workers have previously only been allowed to receive their basic salary from their employers, even if their commission makes up a large percentage of their overall wage. This practice means that many workers are discouraged from taking their holiday entitlement out of fear of missing out on money.

The ruling follows a case from a sales worker at British Gas who brought the case to the European court who decided to take action after only receiving his basic pay whilst on holiday. British Gas claimed that as he was not ‘selling’ at the time, he would only be entitled to his basic salary. It was stated that the worker’s commission accounted for around 60% of his salary, and this cut prompted him to take the case to the UK Employment Tribunal.

The EU Court of Justice judgement overrules existing British legislation, which will now need to be changed, whilst British Gas have stated that “We’ll need to await the outcome of the U.K. Employment Tribunal’s decision to understand the precise impact of this European judgment on UK legislation,” according to Ralph Nathan, the company’s director of employment law.

This ruling poses important questions for UK businesses, especially from a HR and financial perspective, as companies will surely have to allocate funds and incentives to compensate commission workers. The European Union’s Working Time Directive exists to ensure that ‘every worker has the right to paid leave of at least four weeks’ and through not being able to receive remuneration in line with their average earnings, the Court ruled that his could serve as a deterrent for sales workers in taking annual leave at all.

The resulting actions from national courts will be interesting as they determine how much workers should be paid as a result of a representative average of the commission earned over a certain period, with resulting actions having implications as businesses are forced to pay additional holiday pay to their workers.

If you want to discuss the impact of this in more detail then please do not hesitate to contact us for some free initial advice.

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