EMPLOYERS may have overlooked a key European ruling which could require them to include commission when calculating their staff’s holiday pay, it is claimed.

Tom Doherty, owner of The HR Dept in Poole, says a crucial court decision received relatively little coverage while the news media were concerned with the future of Jeremy Clarkson.

The case of Lock v British Gas centred a sales consultant for whom commission made up around 60 per cent of his income.

He brought a claim to employment tribunal, which referred the case to the European Court of Justice for a preliminary view on whether commission should be included in holiday pay calculations. The court agreed with Mr Lock and referred it back to the tribunal.

Mr Doherty said: “Naturally this will cause a lot concern for any business that does pay commission to their staff. It will increase their payroll costs and this will not necessarily something they will have budgeted for.

“I suspect the greater fear will be for backdated claims, though following recent legislative amendments this may be limited to two years back pay if a claim is made.

“The definition of what a week’s pay used to be, i.e. basic salary, for the purpose of calculating holiday pay is fundamentally different now. However we are still not clear what period any payment should be calculated over.

“Our advice is to look at what exposure you may have as a business and take advice on how best to mitigate any potential fallout. We will wait for the dust to settle on this case and naturally there are more questions than answers at this stage, but businesses should take note of this decision.”

The decision follows another ruling last year which could have a big impact on calculation of holiday pay.

The Employment Appeal Tribunal ruled in November that overtime should also be taken into account when holiday pay is calculated.

That case related to the UK’s interpretation of the European Union’s Working Time Directive. The union Unite, acting on behalf of workers at a Nottinghamshire power station, said its members there consistently worked overtime and so received less money on holiday than when they were at work.”