April 9, 2015

How to calculate holiday pay – a short update

Holiday pay calculation

You can read some of our previous updates on this issue here and here.

There was a further hearing in the long running saga of Lock & Ors v British Gas Trading Limited. Unfortunately the tribunal decided not to make a decision at this hearing on the key issue still to be clarified – how to calculate wages for holiday pay and post-holiday pay purposes; should the “reference period” for this calculation be average salary (including commission etc.) in the 12 weeks prior to their holiday? Will it be different calculations and periods for different employees, for example what about the employee who receives their commission in one annual payment? This issue will be decided at a later hearing.

There was one other issue which came out of this hearing – what happens to employees whose wages dip after their holiday because they were not earning commission during their holiday? The tribunal decided that a payment equivalent to commission he would have earned had he been working should be added to his post-holiday wages.

Watch this space for further updates – in particular how to calculate the ‘reference period’ in any given situation.

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