07 May 2015 #Employment
The news this week is that British Gas has lodged an appeal against that employment tribunal decision, which ruled that UK law could be interpreted so as to allow commission to be included in holiday pay calculations.
As well as being significant for employers with commission arrangements, if it proceeds, the Lock appeal will also have a bearing on overtime cases because one of the grounds of appeal in the Lock case is that the EAT in the Bear Scotland appeals incorrectly held that UK law could be interpreted so as to give effect to EU law. This is a significant development since none of the parties in Bear Scotland and others decided to seek to appeal the matter further to the Court of Appeal.
Whilst the appeal will not change the position that EU law requires UK law to provide for holiday pay to be based on ‘normal remuneration’ it does mean the question of whether this first requires a change to UK legislation is still open to argument. British Gas will now argue that the UK Working Time Regulations cannot be interpreted in order to comply with the EU Working Time Directive. In practice, the appeal adds an element of legal uncertainty as to whether employers should change how they calculate holiday pay now, as many are already, or whether to wait on further developments in the courts.
We also note the Court of Appeal in Northern Ireland is expected to consider the position on whether purely voluntary overtime should be included in holiday pay on 17 June 2015 following an appeal against the Employment Tribunal decision in Patterson v Castlereagh Borough Council, which held purely voluntary overtime did not need to be included in holiday pay. Whilst not binding on the courts and tribunals in England, Wales and Scotland, decisions of the Northern Ireland Court of Appeal are considered persuasive by the British courts where there is no binding authority and therefore well worthy of note.
Further, the Bear Scotland case itself was remitted by the EAT to consider how holiday pay should be calculated on the facts of that case, in light of the EAT’s judgment.
As a result of the Lock appeal, assuming it goes ahead, holiday pay cases may be stayed pending its outcome and also the employment tribunal decision in Bear Scotland. Employers will need to carefully consider their strategy in relation to changes to holiday pay calculations in light of the appeal. It may well be that short term agreements with unions and other representative forums should be considered pending the outcome of these cases and any further appeals or government intervention.