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Chambers & Partners
07/10/2016

The Court of Appeal has dismissed British Gas’ appeal in the leading holiday pay case of British G

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Mr Jo Lock is represented by UNISON Legal Services, who instructed Michael Ford QC and Simon Cheetham of Old Square Chambers.

In its unanimous judgment, the Court of Appeal (the Master of the Rolls, Gloster LJ and Sir Colin Rimer) upheld the previous decisions of the Employment Tribunal and Employment Appeal Tribunal.  Those decisions followed a ruling by the Court of Justice of the European Union in Mr Lock’s case that results-based commission was part of his “normal remuneration” for the purposes of holiday pay.  Like so many other workers, Mr Lock was paid a basic salary together with commission, which in his case amounted to about 60% of his total earnings.  When he took annual leave, he lost the opportunity to earn commission and was entitled to receive basic pay only.

Mr Lock’s case was referred to the CJEU by the Leicester Employment Tribunal.  The issue after the case returned to the Tribunal was then one of interpretation.  The Working Time Regulations 1998 (WTR) are the UK legislation that enacted the EU Working Time Directive and the right to paid annual leave.  However, the WTR applies the mechanism under the Employment Rights Act 1996 ss.221-24 for calculating what should be paid in respect of annual leave, which would confine a worker’s pay to his basic salary and exclude any commission element.  The issue post-CJEU was therefore whether the WTR could be interpreted as incorporating the requirement to include commission.

The Court of Appeal concluded that they could.  Applying well-established principles from cases such as Ghaidan v Godin-Mendoza, Vodafone 2 and Swift v Robertson, the Court concluded that the grain or thrust of the WTR could be identified as directed at providing holiday pay for workers measured by reference to criteria required by Article 7 of the Directive, as explained by the CJEU.  In line with that grain or thrust, the Court could and should interpret the WTR as providing that Mr Lock was entitled to have his holiday pay calculated by reference to his normal remuneration (which therefore included commission).  To achieve this, additional words needed to be written into the WTR, which is what the Employment Tribunal had done.

The Court also rejected British Gas’ argument that it was bound by the Court’s previous decision in Bamsey v Albon Engineering, which pre-dated the CJEU’s developing case law on what amounted to normal remuneration for the purposes of Article 7.  Another Court of Appeal decision standing in the way of a conforming interpretation – Evans v The Malley Organisation – also pre-dated those decisions and was equally not a bar to this Court’s conclusion.

To read the full judgment, please click here.

lock, british gas, holiday pay, employment law, cheetham, michael ford qc

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