Regular commission payments must be included in holiday pay calculations, EAT confirms

Mr Justice Singh ruled that there were "no exceptional circumstances" that would justify him coming to a different conclusion than that reached by the EAT in a similar decision on non-guaranteed overtime in November 2014. Although that decision is currently being appealed, ruling otherwise would "merely create uncertainty for everyone who has to apply the relevant legislation", the judge said.

The EAT is not bound by its own decisions. However, there is a "general principle" that previous EAT decisions are of "persuasive authority", and different panels of EAT judges will generally follow them unless the earlier decision is "manifestly wrong" or there are other exceptional circumstances, the judge in this case said.

The matter in dispute, which had been brought before the tribunal by former British Gas salesman John Lock, is the lead claim among "a large number of results-based commission cases" against a number of employers, Mr Justice Singh said.

The EU's highest court, the Court of Justice of the European Union (CJEU), ruled in 2014 that commission payments must be taken into account for the purposes of calculating holiday pay. In its 2014 decision on non-guaranteed overtime, the EAT ruled that it was possible to read words into the UK's Working Time Regulations (WTR) in order to comply with the EU's Working Time Directive (WTD).

During his employment, Lock was paid a basic rate along with commission which, on average, made up about 60% of his pay. This commission, which was based on sales, was paid several weeks after a contract was concluded between Lock's employer and its new customer. When on paid annual leave, Lock was unable to make any sales or generate any commission, which affected his salary during the months after his annual leave.

Whether Lock was entitled to receive payments reflecting commission while on annual leave was no longer an issue in front of the EAT, which instead only had to settle whether UK employment law could be interpreted to give effect to the WTD. Had this not been possible, then the EAT could only have applied UK legislation "despite the incompatibility with EU law", with any legal remedy for the breach lying elsewhere, Mr Justice Singh said.

The judge quoted Mr Justice Langstaff's decision in the non-guaranteed overtime case, where the latter said that the WTR "were specifically made to implement" the WTD.

"It can be presumed that the intention of parliament was to fulfil its obligation to do so fully and accurately," Mr Justice Langstaff said at the time. "If, seen through a modern lens, the words do not achieve that, then to adopt a conforming interpretation is not doing violence to the intention of parliament but instead respecting it."

As the earlier decision was neither "manifestly wrong", nor were there any exceptional circumstances which would have justified the present judge refusing to follow it, Mr Justice Singh adopted the same approach.