In a much-anticipated decision which has implications for many other claims across the UK, the Employment Tribunal in Lock v British Gas decided that the Working Time Regulations (WTR) should be interpreted to ensure that workers receive commission in respect of their annual leave, in accordance with the ECJ’s decision in this case in May 2014.
Mr Lock was employed by British Gas as a sales consultant. He received basic pay and commission payments based on successful sales. Commission amounted to about 60% of his total remuneration. He had normal working hours. Mr Lock was paid his basic salary while on annual leave but received nothing in respect of the commission he would have earned if not on annual leave. The ECJ held that under Article 7 of the Working Time Directive Mr Lock was entitled to a sum in respect of this commission as part of the four weeks’ paid annual leave guaranteed by Article 7.
The question for the Tribunal, where BIS appeared as Intervenor, was whether WTR could be read in accordance with Article 7 as interpreted by the ECJ. Mr Lock’s claim was under the domestic regulations, because EU directives only have direct effect against emanations of the State (when Article 7 is directly effective). The question of interpretation arose only in relation to the four-week period of annual leave in regulation 13, implementing the right in Article 7, and not any additional leave under domestic law. In a case which pre-dated the rulings of the ECJ on the level of pay in respect of annual leave, the Court of Appeal held that commission payments were not to count towards annual leave for an employee who had normal working hours (Evans v Malley [2003] ICR 432).
The Tribunal relied on the recent case of Bear Scotland Ltd v Fulton and others [2015] IRLR 15 in which the EAT held that payment for non-guaranteed overtime should be reflected in remuneration for annual leave under Article 7 and that WTR could be read consistently with Article 7 in this regard. The Tribunal saw no difference in principle between pay in respect of non-guaranteed overtime and pay in respect of commission. Alternatively the Tribunal held that independently of Bear Scotland WTR could and should be read consistently with Article 7 so as to require commission to be paid in respect of annual leave. WTR were introduced to give effect to the Directive. Interpreting the regulations in accordance with the Directive did not go against the grain or the underlying thrust of the domestic legislation.
The Tribunal considered it both permissible and necessary to read words in to WTR to achieve this result, despite the authority of Evans v Malley. The effect of its interpretation is that Mr Lock’s pay in respect of the four-week period of annual leave in regulation 13 must be based on his average pay, and not just his basic pay, using the mechanism of s.221(3) of ERA. This will only apply to the calculation of holiday pay in respect of leave due under regulation 13, the four weeks’ leave required by the Directive, and does not affect the additional 1.6 weeks’ annual leave provided by regulation 13A. The decision is likely to have far-reaching effects. The 2004 Findings from the Workplace Employment Relations Survey found that 40% of all workplaces in Britain had incentive pay schemes, payments which have often not been included in holiday pay.
Michael Ford QC and Simon Cheetham, instructed by Jeanette Sainsbury of the UNISON Legal Department, represented Mr Lock.
For the full judgment, please click here.
Lock, British Gas, Working Time Directive, Cheetham, Ford
In a much-anticipated decision which has implications for many other claims across the UK, the Employment Tribunal in Lock v British Gas decided that the Working Time Regulations (WTR) should be interpreted to ensure that workers receive commission in respect of their annual leave, in accordance with the ECJ’s decision in this case in May 2014.
