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Holiday & sick pay – FAQ

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Holiday & sick pay – FAQ

Are employees entitled to commission payments while on Holiday?

Yes, according to a recent decision of the European Court of Justice in Lock v British Airways.
The basis of paid annual leave is to allow an employee time off from work for their own health. In Lock v British Airways the European Court applied the principle that payment on annual leave should be the workers “normal” salary. They therefore concluded that holiday pay should be calculated in such a way to include commission payments. It, of course, begs the question of what constitutes “normal pay”.

Employers should ensure that where they do pay commission to workers, that this is reflected in the pay they receive while taking annual leave. As a result of the decision in this case, a worker who receives commission payments would be able to make a claim for outstanding holiday pay in the Employment Tribunal in the form of an unlawful deduction from wages claim.

Sickness and holiday leave: What happens when they coincide?

When pre-arranged statutory holiday coincides with sick leave, employees should let their employer know as soon as reasonably practical. However, workers who fall sick during their annual leave also have the right to re-take that leave at a later date.

If this occurs, employees are allowed to take their holiday at another time. If they remain sick until the end of that holiday-leave year, they can reschedule their holiday in the following year.

If an employee turns holiday leave to sick leave, they should expect to receive sick pay only, because they are unfit to do the job during that period.

What about an employee on sick leave who wants to take a holiday during that time? Can they do so?

The Working Time Regulations (WTR) allow employees to do this. Furthermore, employees continue to build up their holiday entitlements while they are off sick, but don't have to take their holiday during that time. They can carry it over to the next year if they haven't been able to take holiday while sick. This right may be subject to limitations and should be carefully reviewed.

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