The Court of Justice for the European Union has ruled that commission must be included in holiday pay for workers whose total salary relies heavily on it.
In the case of Lock v British Gas Ltd, the court ruled that Mr Lock’s entire remuneration package, including commission, must be taken into account when determining holiday pay.
The ruling has been described by Dave Prentis, the general secretary of Unison, the body that represented Mr Lock, as “extremely important”.
He told HR Magazine: “This will assist workers across the European Union to argue that they should be entitled to their normal pay, including any commission payments they normally receive, for periods of annual leave.”
Employment experts have said that the ruling could have a major impact on the cost of taking on commission-based employees, with sales-heavy sectors such as retail and utilities tipped to be the hardest hit.
As employees will be allowed to backdate their claims, small companies could also be negatively impacted by the ruling, it has been suggested. Employment experts reported that the Government may look to limit the period of time that claims can stretch back, in a bid to assist SMEs across the country.