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Your Employment Rights & Getting Extra Holiday Pay Based on Commission

When you have shaken out the last of the sand from your suitcase, a dwindling bank balance after a holiday is usually enough to bring anyone firmly back to reality. This is often a concern for those whose first post-holiday pay cheque is significantly lower than usual after earning no commission whilst away on holiday.

The European Court of Justice has made it very clear that a worker’s right to paid annual leave is a fundamental right and that you should not be deterred from exercising that right. However, the knock-on financial effect from generating no commission whilst away on holiday undoubtedly deters many workers from taking their full leave entitlement.  

On your return from holiday, the European Court of Justice wants you to be in the position you would have been in had you not taken that holiday. Where commission constitutes a significant part of your pay packet, taking time off may significantly impact on income.

However, the message from the European Court of Justice is that you should not be deterred any longer. Your holiday pay should not be calculated according to your basic salary alone. Holiday pay should include provision for commission payments which are directly linked to performing tasks you are required to perform under your contract of employment.

Calculating what might be owed to you will depend on the particular circumstances of your employment.  In general terms, the amount will be calculated by reference to the commission earned in the period preceding your annual leave; which could be as long as 12 months.

If you think you may be entitled to back-dated commission payments, you may have a claim for unlawful deductions in an Employment Tribunal. A short and strict time limit applies to bringing a claim for unlawful deductions (3 months from the last unlawful deduction) and if your employer pays you commission to cover your most recent holiday, it may prevent you from bringing a claim to an Employment Tribunal for commission earned during holidays before that. So you might want to consider taking prompt legal advice. It could be the case you have a right to unpaid commission stretching over many years.

County Court claims may yet be available for underpayments, but the availability of these claims is open to question; unlike an Employment Tribunal complaint.

Whilst we are on the subject of commission, you should also be aware of other instances when your employer may not be paying you the commission you are entitled to. For example, if your employment terminates, check your employment contract carefully to see whether any payment made for your notice period should include a payment for commission. You may also have suffered an unlawful deduction if your employer fails to pay you commission after your employment has ended if you accrued that commission whilst still employed.

If your contract or commission scheme is ambiguous about your entitlement to commission then you should seek expert legal advice on or before termination of employment. Any ambiguity is likely to be interpreted in your favour and it is worth investigating if you feel you have been short changed.

Caroline Philipps is an Employment Solicitor at Slater and Gordon Lawyers in London.

For more information or to speak with an Employment Solicitor call freephone 0800 916 9060 or contact us online and we'll be happy to help.

Slater and Gordon Lawyers UK have offices in London, Manchester, Liverpool, Birmingham, Sheffield, Halifax, Milton Keynes, Merseyside, Bristol, Cambridge, Edinburgh, Cardiff, Halifax, Newcastle, Wakefield & meeting rooms in Bramhall, Cheshire.