Update on holiday pay cases

The Supreme Court has refused permission to appeal to British Gas in the holiday pay case Lock v British Gas. This provides some much needed clarity. We now know that results-based commission (i.e. commission based on sales received) and non-guaranteed overtime (i.e. overtime which employers are not obliged to offer but workers are contractually obligated to perform) must be included in the calculation of holiday pay for the first 4 weeks of holiday under the Working Time Regulations. We also know that the reference period used to calculate holiday pay must be one which reflects normal working. However, no further guidance has been given in relation to what this might be. The case will now go back to the employment tribunal (ET) to calculate the amount Mr Lock is owed.

As a reminder, the position with respect to truly voluntary overtime (i.e. overtime which workers are not contractually obligated to perform) remains unclear. Although there are a number of first instance ET decisions which do suggest that truly voluntary overtime should be included, there is no binding UK authority on the point.

If you would like any advice in relation to calculating holiday pay please do not hesitate to get in touch.