Financial & Legal News

INSIGHT: Landmark Holiday Pay Legal Decision Could Impact Local Businesses

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Pearson Solicitors is warning that a recent employment tribunal against British Gas on the issue of holiday pay could have costly ramifications for businesses in the area.

The long-awaited decision on the case between British Gas and Mr Lock - a salesman on basic salary - ruled that the claimant, who had received holiday pay that excluded commission payments, had suffered an unlawful deduction from wages.

The verdict will impact on future holiday pay entitlement for employees in similar roles as amendments to employment regulations now dictate that in these circumstances, holiday pay should include an element for commission.

However, the risk to employers in terms of back-dated pay-outs has been reduced by the implementation of a two-year cap on backdated claims, which takes effect on 1 July 2015.

Susan Mayall, head of employment at Pearson, commented: “Going forward, employees can claim that commission forms part of their wage for holiday calculation purposes.

“Employers should also be aware that if they start paying correctly from now on, there may be more than a three-month gap from the last holiday pay, which could eliminate the employee’s right to claim retrospective commission in holiday pay.

“It’s a complicated area for employers and we will be advising our clients on the best ways to deal with the impact of the amended regulations to avoid financial penalties.”

Pearson Solicitors has a dedicated team specialising in Employment Law.  For further information, contact Susan Mayall on 0161 684 6948 or email


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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.

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