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Employers face bumper payroll as holiday ruling bites

Sally Morris, employment law specialist, says firms have been left exposed to a flood of claims from their workers following a European Court of Justice verdict on a long-awaited, landmark case.

A British employment tribunal has been forced to re-visit the case of Lock v British Gas, which was brought by a Mr Lock over his & lsquo;lost’ holiday pay between December 2011 and January 2012.

He argued he was entitled to more pay from British Gas because being on annual leave meant he was unable to earn commission and would lose income by taking leave.

The tribunal has now held that his pay should take account of his commission – a decision which has led Morris to warn of huge consequences for other employers across the UK.

Morris, partner and head of the employment division at law firm mfg Solicitors, said, “This is a landmark court decision and is set to have a significant knock on effect across for employers.

“It’s vital that businesses take professional advice on what position the ruling puts them in with their workforce. Failure to do so will leave business leaders exposed to a complicated web of claims, including the potential for backdated claims.

“Many businesses will not have been paying overtime and commission during holiday periods and for them, especially those with large sales teams, this will have a huge impact on their financial bottom line.

“As a first step, employers must review their commission arrangements and determine whether they will affect holiday pay calculations. They must also take steps to review holiday policies, referencing periods and all contracts of employment so that holiday terms and calculations include commission.

“A number of employers will be caught short by this ruling but with some fast and prudent planning, they can stay one step ahead.”

Morris is offering a free 15-minute advisory session to business owners who are looking for advice on the new ruling. Readers can contact her through 0845 55 55 321 or through email on sally.morris@mfgsolicitors.com

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