The Confederation of British industry (CBI) has warned that UK firms face millions of pounds in compensation bills because of a recent ruling by the European Court of Justice (ECJ) that said workers should be paid commission even when on holiday.
In a case involving a British worker last month the ECJ ruled that holiday pay must include an allowance for commission, despite the fact that commission is paid on sales made, which the employee cannot make while not working.
However, in this case, the European judges ruled that, since the individual’s salary was made up of up to 60 per cent commission, the fact that he would not be paid while on holiday might deter him from taking leave at all, which is against the aims of the European Working Time Directive.
In the UK, holiday pay is normally calculated on the basis of a ‘week’s pay’, based on basic salary but excluding payments such as working allowances, overtime, bonus payments, expenses and commission, all of which refer to specific work carried out by someone while actually carrying out their contracted duties.
The CBI is now concerned that the ruling will lead to a rash of claims from workers in a similar position, which could push otherwise profitable businesses into insolvency.
A spokeswoman for the business group said that backdated claims on holiday pay could run into millions of pounds in some cases and threaten the firms’ very existence. She added that the businesses most at risk are vital to the economy, such as manufacturing and construction.
According to the CBI, the Government must therefore take a strong stand on the issue and do all it can to remove the threat, or the UK faces the very real prospect of successful firms going out of business, taking the jobs they provide with them.