AM Online

Court judgement could lead to millions in backdated commission claims

A recent European Court of Justice (ECJ) decision could force dealers to pay out millions in back dated commissions, it's been claimed.

The case involved a salesman who earned a basic wage and was also paid a commission. When he was on holiday his commission payments for that period were reduced.

The salesman has pursued a claim for this 'lost' commission during holiday periods.

The ECJ decided holiday pay should be comparable to the normal pay received had they not been absent.
What could this mean for employers?

Matthew Hodgson, partner at accountancy UHY Hacker Young Manchester, said: "Workers paid by a mix of basic salary, plus commission could claim for unpaid holiday pay dating back up to six years.

"They could also manipulate when they take holiday to receive higher rates of holiday pay.

"This will potentially place an increased financial liability on a business in the future, but also have a significant impact with back dated pay-outs. And it isn’t just sales people, but shift workers, workers undertaking regular paid overtime and those with work related bonuses."

The decision was made in the case Lock v British Gas Trading. It also refers back to a previous decision regarding Williams v British Airways.

Hodgson recommends any employer who feels they may be affected to contact their solicitor and their financial advisor to discuss in detail actions they can take to minimise the impact on their business.

> Case documents.

Click here for talent & people best practice and procurement insight

If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.

Login to comment


No comments have been made yet.