Supreme Court ends British Gas challenge to holiday pay ruling

Last October, the Court of Appeal upheld the Employment Appeal Tribunal’s decision in the case of British Gas Trading Ltd v Lock, as we previously reported. In essence, the Court ruled that the Working Time Regulations 1998 could be interpreted compatibly with the EU Working Time Directive and case law of the European Court of Justice to ensure that contractual results-based commission is taken into account for the purposes of calculating holiday pay.

The Supreme Court has now considered British Gas’s application to appeal against the Court of Appeal’s judgment, but has refused permission. That means we have reached a point of finality on this issue of principle.

This is not, however, the end of the road for the Lock case. The key issues of whether Mr Lock was underpaid and by how much remain to be decided - and also what the appropriate reference period for the calculation should be. The Employment Tribunal will also need to consider whether the commission scheme operated in such a way that it effectively compensated for the period of annual leave, even if the arrangement was not in accordance with the legal provisions about how and when holiday pay should be paid.

It has been reported that the Employment Tribunal will decide on these outstanding matters this month. Only after that decision is given - and any subsequent appeals resolved - will employers potentially have greater clarity about how to calculate holiday pay for those earning results-based commission.