11 June 2015

It’s Not Over Until It's Over: Lock v British Gas goes to Appeal

This article was written by Hilary O'Connor (partner), Carl Richards (partner) and Cerys Williams (counsel).

We have reported widely on the series of holiday pay claims that have radically changed the law on what workers must receive during annual leave. A key shaping factor in the change has been the decision in Lock v British Gas, both in the ECJ and in the Employment Tribunal ('ET') decision, which determined that employers may include commission and other types of variable pay in holiday pay calculations but left open major practical points about how the calculation should work. The resultant legal uncertainty and fear of significant back pay claims has left many employers paralysed over how to address the issue, pending further clarification.

The parties to the Lock case have however recently announced that the ET’s judgment is being appealed by British Gas, so a definitive resolution just moved a little further towards the horizon. The appeal is reported to be on two grounds which do not merely refine the details of the current position but challenge the whole basis of the decision. Firstly British Gas argues that previous cases dealing with overtime should be distinguished as commission needs to be dealt with in a different way. Second, more fundamentally they say that the changes dictated by ECJ case law are incompatible with local law, so that it is not possible to interpret the Working Time Regulations in a way complies with European law. 

So what are the potential outcomes? Well, of course, the appeal may not succeed, in which case, the law will remain as the current position (although perhaps with some of the nuances clarified). If the appeal succeeds, however, then it would mean that English law was out of step with EU law and, assuming we are still part of the EU at that time, would necessitate new UK legislation which complies with the ECJ caselaw. 

So if the law will eventually end up in the same place anyway, then difference will the appeal make? Well, if it's necessary to introduce new legislation then any changes will only take effect going forward from the date the change was made. Whereas, the current cases are a reinterpretation of the current law, which means that we all have to observe the legal fiction that the case merely clarifies what the law always said. Or to put in another way, new law would mean no back pay claims for commission errors.

Although our view is that the Employment Appeal Tribunal is most likely to uphold the current position, the prospect of a potential appeal reinforces that employers who can get away with doing nothing for a bit longer should do that. In any event, legal changes from 1 July will limit back pay claims to two years so employers will be able to negotiate from a more favourable position then. As ever, we will keep you posted on further developments.

Data Central

Have you checked out our new Data Hub? Data Central contains a range of resources to help our clients minimise the legal, regulatory and commercial risks this data-driven environment presents and ensure that its full value is being realised.

A Guide to Investing in Australian Real Estate

Investing Down Under offers a quick overview of the legal, taxation, FIRB and structuring issues you may encounter when investing in Australian real estate.

A Guide to Doing Business in China

We explore the key issues being considered by clients looking to unlock investment opportunities in the People’s Republic of China.

Doing Business in China
Share on LinkedIn Share on Facebook Share on Twitter
    You might also be interested in

    Like many businesses, in light of COVID-19, many individuals who are self-employed are facing the significant challenges of business continuity and cash flow

    30 March 2020

    Recent caselaw sheds light on how to investigate allegations which pit one person's word against another's.

    13 December 2016

    EAT confirms that employers have positive duty to arrange for employees' rest breaks.

    12 December 2016

    The Autumn Statement 2016: key points for employers.

    12 December 2016

    Legal services for your business

    This site uses cookies to enhance your experience and to help us improve the site. Please see our Privacy Policy for further information. If you continue without changing your settings, we will assume that you are happy to receive these cookies. You can change your cookie settings at any time.

    For more information on which cookies we use then please refer to our Cookie Policy.