27 March 2015

HR experts at Wolters Kluwer have drawn attention to the latest stage in the long-running case of Lock v British Gas which focuses on whether workers should receive their normal remuneration during annual leave.

Last year, the EU's Court of Justice (CJEU) ruled that they should because the purpose of holiday pay is to ensure that workers are paid during periods of holiday in a manner which is consistent with the way they are paid during periods of work.

The CJEU was responding to a request for guidance on the implementation of EU law from the Leicester Employment Tribunal, to which the case was then returned so that a UK ruling could be made in the light of the European Court's decision.

Andrew Willis, Croner Head of Litigation at Wolters Kluwer, has noted that, as a result of the latest consideration of the case, the Working Time Regulations should now be read so as to provide that commission payments are included in the calculation of holiday pay.

However, this only applies to the minimum four weeks’ leave provided for under European law, not the additional 1.6 weeks’ leave provided for domestically by the UK regulations.

"Employers will be pleased that the Fulton approach to the issue of back pay remains undisturbed by this ruling," Mr Willis said. "That case decided that any tribunal action alleging an underpayment of holiday pay must normally be brought within three months, or within three months of the last deduction where a series of underpayments is alleged by an employee — and the EAT stated that any underpayments in such a series cannot be separated by more than three months."

Although this point may be re-visited in the future, he concluded, for now concerns about significant claims for back pay have been allayed.