Following an appeal tribunal ruling that holiday pay includes commission payments, the Insolvency Service has announced that the decision also applies to its payments.
In Lock v British Gas (weekly LELR 464), the Employment Appeal Tribunal held that, when calculating holiday pay, employers must include any commission (or similar payment) that forms part of the worker’s normal pay as part of their contract. This is called “contractual commission”.
This decision also affects anyone who has ever been awarded holiday pay from the Insolvency Service in the past, meaning that they may now be eligible for an additional payment related to the contractual commission they were owed by a previous employer. This decision does not, however, affect any other payments from the Insolvency Service.
Potential claimants who applied for a payment after 31 July 2011 do not need to take any action as the Insolvency Service will contact them directly about how to apply for an additional payment if:
- They applied for and received holiday pay from August 2011 onwards
- They indicated on their application that they were entitled to contractual commission.
If however, the claimant applied for payment from the Insolvency Service before 1 August 2011, they need to make contact to apply for an additional payment, if:
- They applied for and received holiday pay before August 2011
- They indicated on their application that they were entitled to contractual commission.
In order to decide whether claimants are eligible, the Insolvency Service requires claimants to send the following evidence:
- The relevant contract of employment that applied at the time (or any other evidence relating to that contract)
- Documentation providing proof of the commission usually earned or evidence from the commission actually earned in the 12 weeks prior to the date of insolvency.
For further information can be found here.