Employment Solicitors: Commission Added To Holiday Pay Entitlement Law
Employers should be aware of new laws relating to commission-based earnings when calculating employees’ holiday pay entitlement.
Else’s employment solicitors, based in Burton on Trent, are warning business owners to update their employment documents to bring them in line with this latest ruling.
Those that fail to address the updated law could face paying expensive employment tribunal costs.
The wording of the Working Time Regulations 1998 act, which covers holiday pay entitlement, was changed after a ruling on the case of Lock V British Gas.
The European Court Of Justice (ECJ) ruled that if commission was related to the number of sales made while at work then it should be included in the holiday pay entitlement – otherwise workers might be dissuaded from taking leave.
It was ruled that Mr Lock, who had worked for the energy provider for a number of years, should be paid an element of the commission he would normally earn as part of his holiday pay. This was awarded because 60% of Mr Lock’s regular monthly income was made up of commission-based earnings.
The wording in regulation 16(3) now reads: “(e) as 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 purpose of section 221.”
To limit the financial burden of these changes on businesses it was ruled that employees could only backdate these claims for two years from 01 July 2015.
Claims will also be time-barred where there has been a break of more than three months between the successive underpayments.
This means claims can only be made within a set period of time, which severely limits an employee’s entitlement to claim backdated unpaid sums. Our employment solicitors can help protect your business’s liability in this area.
If you are an employee and you feel that your holiday pay entitlement is being miscalculated please contact our employment law department to discuss your options. You may not need to go to an employment tribunal.
To discuss a matter relating to holiday pay entitlement please call 01283 526200 or email email@example.com.