Do you have employees on a commission based salary?
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Do you have employees on a commission based salary?

22/05/2014

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The ECJ have issued a decision in the case of Lock v British Gas, which is highly relevant for employers that pay employees a basic salary with an additional salary based on commission. The case was referred to the ECJ by the UK Employment Tribunal, asking the following questions in relation to the EU Directive on the Organisation of Working Time; If an employee is paid a basic salary and a commission payment on a monthly basis, should commission payments be made to emplo...
The ECJ have issued a decision in the case of Lock v British Gas, which is highly relevant for employers that pay employees a basic salary with an additional salary based on commission. The case was referred to the ECJ by the UK Employment Tribunal, asking the following questions in relation to the EU Directive on the Organisation of Working Time;
  1. If an employee is paid a basic salary and a commission payment on a monthly basis, should commission payments be made to employees when on annual leave, even though they did not earn such commission;
  2. If the answer to the above question is “Yes”, how is such commission payment calculated
The ECJ effectively said yes to the first question, which is that the EU Directive must be interpreted as precluding national legislation and practice under which a worker whose remuneration consists of a basic salary and commission, in respect of his paid annual leave, to remuneration composed exclusively of his basis salary. The ECJ further stated in relation to question 2 above, that the method of calculating the commission to be paid to an employee in respect of annual leave time must be left to the national court or tribunal to determine. EU Case law is helpful in determining this method of calculation, which is based on an average over a reference period which is considered to be representative of the commission earned by the employee. While there are existing 1997 Irish regulations on determination of holiday pay, these will need to be considered in light of this ruling. Irish employers with any commission based employees need to be aware of this case and review their contractual annual leave entitlements for employees that are on a commission based salary. A more in depth analysis of this decision will follow over the coming weeks in McDowell Purcell’s Summer Employment E-zine. The full judgment of the ECJ is available by clicking here. Mark Kelly is a solicitor in the Employment and Benefits team. For further information please contact Mark Kelly or Barry Walsh at the Employment And Benefits Law team at Mc Dowell Purcell.