On 28 February 2017 the Supreme Court refused leave to appeal in the landmark case of “ Lock v British Gas ” bringing the legal case to a close.
This long standing legal proceeding, which included representation at Employment Tribunal (ET) Employment Appeal Tribunal (EAT), Court of Appeal (CA) and European Court of Justice ( ECJ) now establishes that UK law must be interpreted in line with the EU Working Time Directive (WTD) and therefore the requirement for holiday pay is that ‘normal remuneration’ , commission payments and compulsory overtime should be included in the calculation of holiday pay for the basic four weeks annual leave derived from the WTD.
The WTR specify that annual leave may only be taken in the year it is due. Payments in lieu of untaken holiday are only permitted on termination. The appeal in "King v The Sash Window Workshop Ltd." case considers instead whether backdated holiday is due if an employee is unable to take holiday for some reason.
The Employment Tribunal will need to now determine what compensation should be paid by British Gas to ensure that workers like Mr Lock are not disadvantaged by taking a holiday (British Gas will have to compensate Mr Lock and approximately 1,000 other employees who have suffered similar losses, currently waiting for the results of this case).
Potentially this could be done by averaging the pay over a given reference period which it will have to be determined. Assuming British Gas does not settle beforehand, the Tribunal may provide some very welcomed guidance on how exactly holiday pay should be calculated when employees receive commission.
So what are employers meant to do now?
Employers should engage suitably qualified help if unsure; this is not an issue to save a few pounds over and then pay hundreds of thousands later.
What about Brexit: will it affect and potentially overturn these decisions?
What we do know is that so far the government has stated that workers rights will be “preserved” and the repeal Bill is intended to enact into UK law all of EU law, and that repeals and amendments will happen on an individual basis after that.
Speculation currently circulating suggests that the WTR will be one piece of legislation that could be repealed or amended.
The Court of Appeal in Lock v British Gas concluded in its judgment that the deciding factor in respect of that appeal was that the presumption that the UK intended the WTR to fulfil “entirely” its obligations under the WTD.