Current UK law does not require commission to be calculated in holiday pay.  However, a recent case from theCourt of Justice of the European Union (CJEU)Lock v British Gas Trading provoked the opinion from the advocate general that commission should be paid during annual leave if it is directly linked to work normally carried out by the Employee and is a ‘constant component of remuneration’.

The premise is that Employees are entitled to take holidays and should be encouraged to do so for rest and relaxation and not deterred because of the financial loss they would suffer if taking holidays would stop or reduce their commission payments.

If the Employment Tribunal agrees with this opinion when they hear the case in 2015, the decision will set a binding precedent requiring Employers to include commission when calculating holiday pay.  As well as the additional cost to Employers for doing this, there may also be concerns that claims could be backdated for a period of 6 years or even longer.