Can recruiters afford to ignore the recent Lock case on the inclusion of commission in holiday pay calculations?
The recent ruling by the Court of Appeal in the case of Lock v British Gas confirms the EAT decision that when calculating holiday pay, the commission a worker would have earned, had they not been on holiday, must be included.
This clearly has more far-reaching effects on those in the recruitment sector, where large commission payments are widespread, than in other sectors. Unfortunately, the ruling offers no guidance as to how these payments will be calculated in practice. The judgment states that it is confined to the facts of Mr Lock’s situation only and all of the inevitable questions that result from this decision are deliberately not addressed.
The judgment follows interpretation of the Working Time Regulations by the European Court of Justice in 2014. Subsequently, as the current climate shows, we do not know the effect that Brexit will have on the EU rules integrated into UK legislation. Could this be an example of a potentially unworkable EU decision that the government will soon have the power to ignore?
Until the matter is resolved one way or another, recruiters seem to have only two main options: to ignore the ruling (so risking time-consuming and costly ET claims); or to hazard a guess as to what method should now be used to calculate holiday pay, in the absence of any clear guidance.
Lawspeed has devised a third option, involving a review and adjustment to your contract and commission arrangements, keeping you protected. If you are unsure where the Lock case leaves your business, why not give us a call on 01273 236 236?
Adrian, a highly experienced lawyer, founded Lawspeed in 1997. He is responsible for developing our extensive portfolio of products and services, including the widely used Lawspeed contract templates. Adrian is an expert on “recruitment law” and specialises in contracts, regulatory compliance, employment status and dispute handling. He is chair of the trade body the Association of Recruitment Consultancies, the only lawyer lead recruitment trade body in the UK. Adrian and his co-director Ravi devised Standards in Recruitment as a vehicle for helping drive up standards and compliance in the industry.
Adrian is our lead in discussions with the government over regulatory evolution. Apart from assisting with client support, Adrian’s primary role is research and development into methods of business delivery, our latest service Proterms being his most recent project. Adrian heads our IR35 lawyers team.