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Holiday Pay - Lock v British Gas

Last week in Lock v British Gas the Employment Appeals Tribunal (EAT) held that domestic legislation regarding holiday pay, which is in the Working Time Regulations 1998 (WTR) and in sections 221-224 of the Employment Rights Act 1996, can be interpreted in a manner which conforms to EU law.

The Claimant Mr Lock worked for British Gas as a salesman. His remuneration package included both a basic salary and commission which was based on results rather than the amount of work completed. The remuneration paid to him during annual leave consisted of only his basic salary; since he was not working, he could not earn commission whilst on annual leave.

The Claimant brought a claim to the Employment Tribunal (ET) arguing that the method used to calculate his holiday pay was contrary to requirements of domestic legislation stated above. He argued that domestic legislation had to be interpreted in conformity to Article 7 of the EU Working Time Directive, which concerns requirements for annual leave. (The domestic WTR were created out of the EU Working Time Directive). The European Court of Justice (ECJ) had previously held that Article 7 requires results-based commission to be taken into account when calculating holiday pay.  

The EAT dismissed the appeal, finding in favour of Mr Lock. It held that it must have been the intention of Parliament to comply with EU law, and that therefore it is necessary to imply words into the WTR to ensure that it is compliant with EU law. The EAT decided that it could follow the recent case of Bear Scotland, in which it held that domestic legislation can be interpreted in conformity with the Directive.


This bulletin is for general guidance purposes only and should not be used for any other purpose.

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