Employment Law Cases

British Gas Trading Ltd v Lock

In the long-running litigation relating to what should and should not be paid to a worker when they are on holiday, British Gas went to the Court of Appeal to argue that this should not include results-based commission and that English law, as currently drafted, could not be read as complying with EU law and therefore a change of law is required. This would have the practical effect of there being no ability to bring back claims until the new law is imposed. It lost on both counts.

That said, the legal landscape of this long-running saga has changed significantly since the ECJ’s original decision that holiday pay should include results-based commission. At the time, all legal commentators were saying that whatever the outcome of British Gas’ litigation on whether our current laws could be read as complying with EU law, we were always stuck with the fact that the ECJ had ruled on this and as they were the ultimate arbiters on the Working Time Regulations, this would be the law going forward.

However, since then the UK has voted to leave the EU and this means that the Working Time Regulations, which are regulations which derive from the European Union Act, will fall away when the European Union Act is repealed. Whilst much was made by the ‘In’ campaigners that this will mean a reduction in rights for workers, Theresa May has been very clear that not only will rights be protected but they will be enhanced.

So, in 2018 when the European Union Act goes, what will the government put in its place to protect working hours and holidays? Will they really say that they want to go back to the pre-Lock days of only paying holiday at basic rate? Unlikely given Theresa May’s comments.

What should businesses do in the meantime whilst this uncertainty hangs over them? As the law stands at the moment, their workers are entitled to holiday pay which includes results-based commission. Therefore, workers can bring claims going back two years for underpaid holiday pay. Employers could decide not to change their holiday pay to include results-based commission and take the risk that British Gas will go to the Supreme Court and get a decision that UK law cannot currently be read as complying with EU law and that a change of law is required. They will also take a risk that the government decides to introduce legislation in 2018 which says that only basic pay should be paid when workers are on holiday - which is unlikely given Theresa May's comments.

However, employers who still have schemes that only pay basic salary to workers on holiday will have to accept that they have potential claims within their businesses which they will have to declare to their accountants and accrue for any potential liability.

Our experience is that many employers have decided to change their holiday pay now, with a discretion to amend it again based on any change in the law. They have done so voluntarily, therefore gaining the respect of their workforce who are all too familiar with their rights these days.

Link to transcript: http://www.bailii.org/ew/cases/EWCA/Civ/2016/983.html