Bonus and Holiday Pay
In the case of British Gas Trading Ltd v Lock & Anor the EAT heard an ”appeal against a finding that domestic legislation could be interpreted in conformity with the requirements of the Working Time Directive, such that results-based commission payments (not dependent on the amount of work undertaken) must be included in the Claimant’s holiday pay.” The Appeal was dismissed.
The Claimant, who was employed by the Respondent as a salesman, was paid a basic salary plus results-based commission. His commission was dependent not on how much work was done, but on how many new contracts he managed to secure. However, his holiday pay consisted only of basic salary. Since he was not working, he could not earn any commission payments. The Claimant issued a claim for unlawful deduction of wages in relation to under payments of holiday pay. He complained that the method of calculating his holiday pay was contrary to the requirements of section 221 Employment Rights Act 1996 ("ERA") and regulation 16 of the Working Time Regulations ("WTR"), which he claimed could and should be interpreted in a way which conforms to the requirements of Article 7 of the Working Time Directive ("WTD"). The Tribunal referred the matter to the CJEU, which confirmed that the WTD requires results-based commission to be taken into account when calculating an employee's holiday pay. The Tribunal then held that it was possible to interpret domestic legislation in conformity with the requirements of the WTD by reading words into regulation 16 of the WTR. The Respondent appealed, broadly on the grounds that it was wrong in law to conclude that it was possible to interpret the WTR to conform to the requirements of the WTD and further that the recent EAT decision in Bear Scotland & Ors v Fulton & Ors (concerning guaranteed overtime) was either distinguishable or wrongly decided and in any event not binding and should not be followed.
The EAT dismissed the appeal. The ERA and WTR can and must be interpreted in a way which conforms with the WTD on holiday pay. Parliament's intention must have been to comply with EU law. Having considered a number of other authorities, the EAT saw no reason to depart from the reasoning in Bear Scotland. Although not bound by its own previous decisions, they are persuasive. The EAT may only depart from its previous decisions where they are manifestly wrong or in other exceptional circumstances. Such departure could not be justified in this case.””
