European Court rules on commission and holiday pay a disaster for recruitment firms says APSCo
“This is obviously a huge issue for any commission based sales environment and will consequently have a serious impact on recruitment firms which may now have to think seriously about how remuneration packages are structured – and potentially how they may need to be changed. We are very concerned by this ruling and have alerted our members.“
The ruling stems from a British Gas employee who was paid regular commission for sales – because he made no sales during his annual leave he received less income in the months following his leave. The CJEU has said that his holiday pay should have taken into account commission payments as otherwise & lsquo;he may have been deterred from exercising his right to annual leave’.
Samantha Hurley continued, “Rather unhelpfully the CJEU did not expand on its ruling to give any indication of how the holiday pay should be calculated and has said that this is for the UK courts to decide. And so, yet again are members are faced with uncertainty as to how to interpret the legislation, and we will need to await case law to give some clarity.”
REC Solicitor Bunmi Adefuye said, “Currently in the UK, the calculation for holiday pay will include commission for workers that do not have normal working hours. However the ECJ ruling extends this entitlement to workers that have normal working hours but their pay fluctuates depending on the amount of work they have done.
"It is vital that recruiters talk to clients as soon as possible to negotiate any adjustments to pay rates for workers that have normal working hours and receive commission to ensure that there is absolute clarity on the workers’ holiday pay entitlement.”