Should holiday pay include commission?
Meredith Hurst Monday, December 16, 2013
Advocate General Bot has given his opinion on how to calculate the holiday pay of workers whose remuneration is made up of a fixed component and a regular variable component. In the case referred, Mr Lock was paid a basic salary and regular commission payments for sales achieved in the previous period.
The Advocate General considered that holiday pay of workers should comprise both their basic salary and an amount that reflects the commission, or other regular variable component, previously earned over a representative period. The Advocate General took into account that the right to paid leave in Article 7 of the Working Time Directive (2003/88/EC) is intended to enable a worker to actually take the annual leave to which they are entitled. Remuneration during the leave period should therefore be commensurate with remuneration during comparable periods of work. Otherwise, there is a risk that a worker will be deterred from taking their annual leave entitlement.
In the Advocate General's opinion, it was not sufficient for Mr Lock to just be paid his basic salary plus the commission falling due during the holiday period, as he should be compensated for the fact that he would be unable to make sales and therefore earn commission while on annual leave.
The Advocate General stated that it was for each national court to determine how the variable component of holiday pay should be calculated. However, he considered that taking the average amount received by the worker over a representative period, for example, the previous 12 months, would be appropriate.
The case will now proceed to the ECJ who will not be obliged to follow the Advocate General's opinion.