Many employers will face a higher holiday pay package following a recent EU decision, an expert has warned.
Kim Klahn, a solicitor with Stratford-upon-Avon based Lodders, said the bill was set to rise in the wake of the Advocate General of the Court of Justice of the European Union’s opinion that it should be calculated taking in commission as well as basic salary.
“This is going to increase employer costs,” cautioned Ms Klahn, who has been running Lodders’ new employment service Empline which aims to provide business owners and HR professionals with legal peace of mind for a fixed annual fee.
The opinion of the Advocate General stated that employees whose pay is commission based, should be entitled to holiday pay that includes an amount that reflects their commission previously earned over a representative period.
The case involved Mr Z J Lock v British Gas.
Ms Klahn said: “The Advocate General has given a clear signal that Mr Lock, an internal energy sales consultant, should be entitled to his commission payments when on annual leave.
“Currently he loses more than 50 per cent of his average earnings for any period of annual leave. As a result he would never take more than five consecutive days.
“This is an important case as commission often features in the pay package of workers in the UK and across the EU.
“The unions are already hailing the decision as a major step towards allowing workers who rely on commission as part of their regular income, to take a holiday without fear of losing out.
“Naturally, Empline has been briefing this information to clients to keep them up-to-date and enable them to forward plan.”
The Lock case, first aired at an Employment Tribunal in Leicester, has been in the pipeline for nearly two years.
Ms Klahn said: “This will put an extra burden of cost on businesses but the EU takes the view that people need a proper break from work.
“For that to happen employees must not fear being penalised. This opinion, as with employers being no longer permitted to roll up holiday pay, is part of the process.”