In May 2014, the European Court of Justice clarified that if workers are paid commission as part of their remuneration, commission must be included when calculating holiday pay (see Lock v British Gas).
This was confirmed by the Employment Tribunal (ET) during a two day hearing in February this year. However, the ET decision did not provide a definition of “commission” or an approach which should be followed by employers when calculating holiday pay. In light of the uncertainty created by the lack of clear guidance, employers were left to balance the commercial risks and decide whether to include commission in holiday pay calculations or wait for the outcome of Lock’s appeal, which is scheduled for December this year.
Easyjet has now become the first airline to agree to compensate its cabin crew for holiday pay underpayments resulting from not including commission in the calculations for annual leave. Any holiday pay owed to eligible staff will be backdated for a period of 2 years.