Wednesday

31st Aug 2016

EU court ruling to boost holiday pay for workers on commission

  • Commission and overtime payments must be factored into holiday pay, the EU's court of justice has ruled (Photo: Cedric Puisney)

Thousands of workers across the EU are set to see a boost to their holiday pay as a result of a ruling by the EU's top court.

On Thursday (22 May), the European Court of Justice found that salespeople whose pay is based on commission as well as a basic salary, must have the commission that they would normally have earned factored into their pay while on leave.

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Under the bloc's fifteen-year-old working time directive, all EU workers are entitled to at least four weeks of paid leave.

The judgement by the court in Luxembourg could lead to an effective pay rise for the millions of workers across the EU whose pay includes supplements, such as commission, bonuses and overtime payments, which are not paid in respect of their annual leave. The burden of payment would fall on companies and firms.

The ruling hinges on a case brought by UK trade union Unison on behalf of a salesman, Mr Lock, employed by British Gas, for whom commission represented over 60 percent of his monthly pay. He argued that he should have received the same pay while on leave.

British Gas had argued that Mr Lock had been paid his basic salary plus commission from sales he had made during previous weeks.

However, the Court found that because he was only paid a basic wage, the "adverse financial impact" would deter Lock from taking annual leave.

"Such a reduction in holiday pay is liable to deter the worker from actually exercising his right to take his annual leave, which is contrary to the objective pursued by the Working Time Directive," noted the Court.

In a statement, UNISON General Secretary, Dave Prentis, described the ruling as "an extremely important decision that will assist workers across the European Union to argue that they should be entitled to their normal pay, including any commission payments they normally receive, for periods of annual leave".

Contacted by EUobserver, UNISON said that the ruling reflected "a culture" of workers on commission being afraid to take holiday for fear of lost earnings.

But although the court ruling will have to be applied in all 28 EU countries, the new rules on how to calculate holiday pay will depend on the national laws which apply the EU directive.

Lock's case, as well as the rules for the UK, will be decided by a employment tribunal in Leicester.

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