Should Holiday Pay Include Commission?

There are always changes being made to Payroll legislation, which ultimately will make their way through to the frontline of Payroll Services  your own company’s payroll. Which is where we at J L Payroll Services come in.

In this blog we look at a recent decision by the Employment Appeal Tribunal (The EAT) which suggests that employers need to pay commission as part of holiday pay, a decision which if it survives the inevitable appeal process means commission payments will need to be included in payroll calculations for holiday pay.

What was the reason for the EAT decision?

The case involved British Gas and is about whether employers must take into account commission payments when working out holiday pay. It has already been established under EU law that holiday pay should take into account commission payments, if commission is part of normal pay. It should be stated that this element of EU law is only binding directly on public sector employers.

However, in another case, the EAT ruled that UK domestic law, which applies to all employers (and not just public sector employers), must be: “interpreted in a way that conforms to EU law by requiring employers to take into account non-guaranteed overtime payments when calculating pay for the basic four-week holiday entitlement under the Working Time Regulations.The tribunal in the British Gas case ruled last year that the same approach applies to commission payments.”

What does this mean for Payroll Services?

Appeals are expected against the EAT’s decision, and we await the outcome with interest.

As outsourced Payroll Services suppliers, you can be sure that as soon as the rules and laws relating to Payrolls change we will make all the necessary changes to your payroll, ensuring that our service is quick, accurate and efficient. This means you can get on with running your business without having to worry about your Payroll.

Contact us or call us on 0121 422 0550 for a free quotation.