Lock v British Gas Court of Appeal Judgment on Holiday Pay Calculation
This judgment follows where Bear Scotland v Fulton left off. In Bear, it was decided that an employer should include overtime in their holiday pay calculations. In Lock, British Gas tried to argue that it would be wrong to add to the wording of the Working Time Regulations in order to conform with current ECJ jurisprudence of the EU Working Time Directive (No.2003/88). The EAT did not accept that and ruled that the Working Time Regulations can be interpreted to require the employer to include results-based commission in the calculation of holiday pay. In practice, a “week’s pay” was to be calculated not under the ERA s221(2) but by taking an average of the worker’s remuneration over a 12-week period, including any commission (s221(3)).
British Gas appealed to the Court of Appeal, arguing that it had not been open to the tribunal to amend the WTR under the guise of interpretation, and that its interpretation was precluded by domestic authorities.
The judgment of the Court of Appeal was released on Friday and upheld the decision of the EAT. The judgment notes that the domestic authorities relied on pre-date the decision of the ECJ that member states could determine the level of holiday pay. The Directive was now clear that, under Article 7, holiday pay was to include commission. The question was whether the WTR could be interpreted to give effect to that. The CA considered the fact that the WTR was specifically enacted to implement the Directive and the purpose of the WTR was to fulfil the UK’s obligations under the Directive, even those obligations not apparent at the time of enactment. Since the ECJ had subsequently interpreted Article 7 as requiring the worker’s ‘normal remuneration’ to be taken into account, the court could and should interpret the WTR accordingly. The grain or thrust of the WTR could be identified as directed at this. This did not offend against the principles of legal certainty and non-retroactivity but was an example of the national court performing its duty to provide a conforming interpretation of legislation implementing a Directive.
British Gas has now applied for permission to appeal to the Supreme Court.