The EAT has given a safe decision in Lock v British Gas which upholds the current status quo. Contrary to many headline reports, it has not determined, in this case at least, that commission should be included in holiday pay. In fact, this was never the issue in the appeal, which was limited to considering whether the Employment Tribunal was correct to find that the Working Time Regulations can be interpreted in line with the ECJ’s interpretation of the Working Time Directive. Even with this limited ambit, the EAT reached a narrow conclusion. Mr Justice Singh declined to reconsider the substantive arguments on whether the domestic law can be interpreted to conform with EU principles. Instead, his conclusion is that EAT’s previous decision in Bear Scotland cannot be distinguished, is not “manifestly wrong” and there are no “exceptional circumstances” which would permit him to depart from it. In conclusion, the judgment states that “if Bear Scotland was wrongly decided that it must be for the Court of Appeal to say so.” This EAT decision is not likely to be the end of the story. BLP attended the two day hearing at the end of last year and at the time, Counsel for British Gas made it clear that British Gas intended to appeal to the Court of Appeal, should it be unsuccessful. This is now likely to happen. However, as the Court of Appeal is currently dealing with a backlog of cases, any appeal may not take place for some time.
What does this mean for employers?
For employers who have been waiting for appellate authority before addressing holiday pay issues, this decision is unlikely to provide impetus for positive action. For those employers with cases stayed pending the outcome of any Court of Appeal process, expect a further, lengthy wait. The EAT's decision is essentially just one more finding in the growing body of holiday pay litigation. Since all it does is confirm that the decision in Bear Scotland is binding on the EAT and below, it does not take us much further forward. Further, there is still no case law addressing issues such as whether annual bonuses should be included in holiday pay and how the reference period works in practice. This therefore remains an area of significant uncertainty for employers. However, based on the current trend for flexibility in judicial interpretation in working time cases, it seems unlikely that the Court of Appeal would overturn Bear Scotland and refuse to interpret holiday pay broadly.