Circular No NP/ 70 /16
To All Branches, Regional Offices & Regional Councils
Our Ref: L/2/2016
23rd January 2016
Legal Update: Holiday Pay.
Further to Circular NP/099/14 of the 29th May 2014 where I reported the case of Lock v British Gas, and Circular NP/149/14 dated 2nd September 2014, and NP/223/14 on the 5th November 2014 reporting the EAT decision in Hertel,Amec v Wood and others and Bear v Fulton favour of the workers . The EAT today in the case of Lock v British Gas Trading Limited.
British Gas had appealed against a decision of an employment tribunal in Leicester (reported on the 2nd September 2014), which decided that it was possible to interpret domestic legislation (Regulation 16 of the Working Time Regulations 1998 and sections 221 to 224 of the Employment Rights Act 1996) so that results-based commission should be taken into account when calculating an employee’s holiday pay.
Mr Lock was a salesman employed by British Gas. Whilst on holiday, he was paid his basic salary and any results-based commission which had been earned earlier, but since he was not working he could not earn any further commission. Results-based commission formed a significant part of his pay packet. Mr Lock and a large number of others brought claims in the employment tribunal and his case was selected as the lead case. The Employment Tribunal in his case decided that, following the reasoning in the Employment Appeal Tribunal decision of Bear Scotland and others v Fulton and Others  ICR 221, the domestic legislation could be interpreted in line with the requirements of EU law (namely Article 7 of the Working Time Directive), and gave judgment in favour of Mr Lock. The decision in the Tribunal followed a reference to the European Court of Justice, which held that the commission was part of Mr Lock’s normal pay for the purposes of payment in respect of annual leave (reported at  ICR 814).
On appeal, Mr Justice Singh sitting in the Employment Appeal Tribunal determined that it was not possible to distinguish Bear Scotland from the present case. While Bear Scotland concerned the inclusion of non-guaranteed compulsory overtime rather than results-based commission, both Bear Scotland and Lock had as their central issue the interpretation of sections 221 to 224 of the Employment Rights Act 1996. Further, Bear Scotland was not “manifestly wrong”. Singh J. declined to add any further gloss to that phrase, save as to say that it means a decision which can be seen to be “obviously wrong”. He considered that Mr Justice Langstaff in Bear Scotland had correctly understood and set out the relevant principles in relation to the interpretative obligation on English courts to construe domestic legislation in line with EU law. He concluded that it would be inappropriate for him to reconsider the merits of the substantive argument which had so recently and at length been considered in Bear Scotland, and that, if that case was wrongly decided, it must be for the Court of Appeal to say so, not for the Employment Appeal Tribunal