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Landmark ruling over commission in holiday pay ‘could cost employers more’
EMPLOYERS could have to spend more on holiday pay following a European legal ruling, a Bournemouth solicitor has warned.
The European Court of Justice ruled that sales staff whose pay included commission should be paid that commission while they were on holiday.
The case which went to Europe involved a British Gas salesman whose pay was made up of a basic salary plus a commission which was linked to sales and paid some time after those sales were made.
An Employment Tribunal considering the case referred several questions to the European Court of Justice. The court said that when variable sums were linked intrinsically to the performance of an individual, then those amounts must be taken into account when calculating holiday pay.
Robin Watson, employment law specialist with Laceys Solicitors LLP in Bournemouth, said: “If remuneration is made up of a basic salary and variable amounts which are linked intrinsically to the performance of the tasks of the individual, then the variable amounts must be taken into account when calculating holiday pay.
“Holiday pay has always been a thorny issue and specialist legal advice should be sought before making any changes. The current methods of calculation can be technical and confusing and professional guidance is recommended.
“It may be that employees will start to consider making claims for holiday pay that is owed and did not take into account commission and other payments. These claims could be substantial.”
Mr Watson said the idea way in which the employment tribunal involved deals with the ruling would be significant. But he said businesses could not ignore the thrust of recent court rulings on the subject.
More rulings are expected this summer concerning overtime and holiday pay.