The European Court of Justice (ECJ) has today [22 May 2014] handed down judgment in a case which could mean that employers face huge liabilities for holiday pay.

The issue arises because of an apparent conflict between UK and European law as to how holiday pay should be calculated and in particular whether overtime and commission must be included.

The ECJ said in its ruling today in Lock v British Gas that commission must be included as otherwise the financial disadvantage suffered might deter workers paid on a commission basis from taking leave.

UK law does not include commission or overtime in the calculation of holiday pay.

The UK courts will have to decide in a series of appeals due to be heard this summer whether, as a result of the ECJ’s decision in Lock and a similar case (Williams), overtime should have been included in holiday pay.

If so, employers could face liabilities for unpaid holiday pay going back several years.

For further details, click here.

http://www.dlapiperbeaware.co.uk/holiday-pay-must-include-commission-ecj-rules/