British Gas refused right to appeal in holiday pay commission case

Updated: 

British Gas has lost its final chance to appeal after losing a legal battle against an ex-employee over holiday pay rates.

Thousands of employees whose wages are partly dependent on results-based commission could stand to benefit after the Supreme Court denied the energy giant the opportunity to appeal against salesman Joe Lock's legal victory in the country's highest court. 

Mr Lock launched legal action against his former employer in 2012, with his lawyers arguing the company's pay structure was a disincentive to taking holidays and the failure to take into account his commission was in breach of EU law.

In 2014, the European Court of Justice (ECJ) ruled that British Gas's policy acted as a deterrent to workers wanting to take time off and was contrary to the EU Working Time Directive's aims of not discouraging workers from taking breaks for health and safety reasons.

When the case returned to the UK, an Employment Appeal Tribunal (EAT) agreed that result-based commission should be factored into holiday pay calculations - a decision upheld by the appeal court.

But Unison union, which backed Mr Lock, has warned this right could be at risk if the country embarks on a hard Brexit. 

Commenting on the Supreme Court decision, Unison general secretary Dave Prentis said: "It's taken nearly five years to get here, but now all employees who earn commission will see that reflected in their holiday pay.

"Until now, many whose wages included commission lost a lot of money whenever they took a holiday. Many simply couldn't afford to go away. Today's decision puts right that wrong.

"But this is an employment right based on a European directive, something that could well disappear once the UK finds itself outside the EU. The Government must prove it's on the side of ordinary workers by showing how it's going to protect all rights such as these."

The union says the case has implications for employees who normally receive commission and are paid less than their normal income during periods of annual leave.

The decision confirms that anyone whose pay includes an element of results-based commission is entitled to have their holiday pay based on both basic pay and any commission they have earned, it said. 

Mr Lock joined British Gas in February 2010 to sell British Gas's energy products. His claim related to holiday pay for his 2011 Christmas break.

He complained that British Gas had failed to include in it a commission element, resulting in an unlawful underpayment of £1,500.

In February 2016, the Court of Appeal upheld a decision by the EAT.

The energy giant then lost its subsequent appeal over the ruling.

It applied for permission to appeal the decision at the Supreme Court, the highest court in the land, but was given a definitive no. 

Glenn Hayes, an employment partner at Irwin Mitchell, said: "This really is the end of the line for British Gas and they will have to compensate Mr Lock and approximately 1,000 other employees waiting in the wings who have suffered similar losses

"The principles involved have already been determined by the European Court of Justice and all that remains is for the Employment Tribunal to determine what compensation should be paid by British Gas to ensure that workers like Mr Lock are not disadvantaged by taking a holiday.

 "This is likely to be done by averaging his pay over a given reference period which it will have to determine."

A British Gas spokesman said: "It was important to get a definitive ruling on this issue from the courts and we now have this.

"We have been in discussions with our trade unions and will continue to engage with them on the calculation of holiday pay for affected employees and to seek a resolution of outstanding claims."