Never, as Winston Churchill would certainly not have said, has any Court judgement awaited so eagerly by so many said so little about so much.
The Court of Appeal has now issued its ruling in the Lock holiday pay case, confirming that the Working Time Regulations can and should be read to entitle employees to their “normal pay” while on holiday, not just basic salary. In other words, “results-based” commissions need to be taken into account in the calculation of holiday pay. This decision did not concern overtime but the principles there are the same.
To that extent the Court’s decision does not take us far unless you are a keen fan of legal theory as it relates to the boundaries of the rights of courts in EU Member States to bend domestic legislation to and beyond breaking point (Hello? Anyone?). In fact this ruling does not even take Mr Lock very far, since their Lordships expressly declined to answer the question weighing on employers across the country – I get the principle, but how on earth should I implement it in practice? One of the guiding principles of EU law-making is that people should be able to work out from domestic Member State legislation what they need to do in order to comply with it. Right now that is just not the case on this point, nor is it likely to be so in the near future. As matters stand, even if there is no further appeal against this decision, neither British Gas nor Mr Lock is technically in a position to determine precisely what allowance should be made for commissions in his holiday pay.
However, there are some chinks of light in the decision for employers with lumpier or less predictable or regular bonus and commission schemes than Mr Lock’s daily accrual at British Gas. It appears that the potential unfairness of calculating holiday pay by reference to earlier commissions or bonus in circumstances where they would not have been earned during the absence has finally been recognised. “Is the banker who receives a single large results-based annual bonus in March entitled on his summer holiday to leave pay including an element referable to his bonus? … There may indeed be a question of what is “normal remuneration” is and whether its calculation ought to reflect his annual bonus, and if so, how“. The Judge also asks into thin air “How ought the WTR deal with the type of worker who receives no commission for some months of each year?“, and follows this with a keen contender for the judicial understatement prize – “Other types of case will raise other questions“. Sadly, however, the very next paragraph says defensively that “Nothing in this judgement is intended to answer them“. Much obliged, my Lord.
Maybe it is reading too much into one word, but the reference above to “whether” the banker’s bonus ought to be taken in to account seems to me to put a further foot in the door of an argument that if the employee cannot show that he would probably have received a particular commission or bonus in a particular holiday period, he should not be paid for it. That particular fight is clearly not yet over.