Probably the most significant development recently is the issuing of a decision by the European Court of Justice Lock v British Gas Trading. In that case the ECJ held that commission payments and bonuses should be taken into account in calculating holiday pay because the payment of commission and bonuses is"intrinsically linked to performance".

That decision follows the rationale applied in the decision in British Airways v Williams in 2011 that pay during annual leave has to equate to basic pay plus all component parts of the total remuneration intrinsically linked to performance.

These two cases have potentially major implications for employers. It is known that a number of trade unions are currently intimating claims on behalf of their members where holiday pay has not included aspects of remuneration such as commission, bonuses, overtime payments, stand by payments, call out allowances etc.

The law on each of these items is not necessarily clear but as matters currently stand it is probably true to say that overtime payments should not be included in holiday pay where overtime work is neither compulsory nor guaranteed. Whether that will remain much longer remains to be seen. Turcan Connell are currently advising a number of organisations in relation to holiday pay claims.

We’re always happy to discuss things further.
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