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Holiday pay, commission and the Lock decision

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The influence of the European Union upon the UK’s laws is a topic rarely out of the news, especially given the growing media attention surrounding the Brexit campaign. A recent decision of the Employment Appeal Tribunal in the ongoing claim of Mr Lock will do little to reassure those commentators worried about the sovereignty of the courts of England and Wales.

Those who have followed this case from its outset will recall that Mr Lock was a salesman for British Gas who was paid a basic salary plus commission. This sum was determined entirely by the number of contracts he was successful in obtaining and in reality was much more than his basic take home pay. While he was entitled to take 25 holidays per year, he was unable to earn commission during this time and therefore was effectively penalised for doing so, which he claimed was contrary to his rights under the Working Time Regulations.

The decision originally made by the Employment Tribunal was that Mr Lock was entitled to receive holiday pay calculated using the basic pay as well as the commission that would have been received, and justified its decision on the basis that the domestic legislation had to be interpreted in a way which was consistent with the Working Time Directive.

This matter was referred to the Court of Justice of the European Union and the interpretation of the legal point was settled at that stage. However the issue that the EAT had to determine was whether domestic law prevailed over EU law, or whether the European Directive took precedence. The judgment handed down earlier this week confirms that the purpose of the Working Time Regulations was to implement the Directive and as such it was necessary to read wording into the domestic legislation to comply with EU law.

As the EAT judgment made clear, this decision will have a huge impact as it will pave the way for over 900 known similar claims involving British Gas, and potentially affects many thousands more employees. While many will welcome this decision which supports workers’ rights, others may view it as a further encroachment upon the UK’s ability to make its own laws and therefore add further fuel to the Brexit fire.