Brexit means British Gas holiday pay ruling may never become UK law, warn lawyers


The decision by the Supreme Court to refuse the utility supplier’s appeal effectively ends the judicial process, meaning that employers could be forced to change their reward structures – unless a ‘hard’ Brexit takes place as it could jeopardise the ruling, which is based on EU law.

Although British Gas has lost its final right to appeal a ruling over commission payments relating to holiday pay, a ‘hard’ Brexit could mean it never becomes part of UK legislation anyway, say employment lawyers.

The decision by the Supreme Court to refuse the utility supplier’s appeal effectively ends the judicial process. It followed a ruling that found in favour of former employee Mr Lock regarding the company’s rates of holiday pay.

Lock sued British Gas in 2012 after it failed to include commission in his holiday pay, resulting in an underpayment over the 2011 Christmas break of £1,500. Lawyers at the time argued that the pay policy acted as a disincentive to staff taking leave. It was also in contravention of the European Union (EU) Working Time Directive, which protects workers’ health and safety by requiring employers to ensure they take breaks and time off.

That British Gas has been denied the right to appeal the decision against it by the highest court in the land means that it, as well as employers in other sectors, could be forced to change their reward structures – unless a ‘hard’ Brexit comes to pass as it could jeopardise the ruling, which is based on EU law.

Joseph Lappin, employment law solicitor at Stewarts Law, told the Chartered Institute of Personnel and Development’s People Management publication that it was right to sound a note of caution over Brexit as the government had a “clear desire” to end the jurisdiction of the European Court of Justice (ECJ) in the UK.

As a result, it could well introduce new legislation to “specifically exclude commission from holiday pay”, while any tribunals challenging the issue would not be subject to scrutiny by the ECJ.

Paula Kathrens, partner in employment law firm Blake Morgan, also believed it “conceivable” that a similar case heard by the Supreme Court in a post-Brexit world could result in a different decision, which depending on the terms under which the UK left the EU, could mean it was not bound by the ECJ.

But in the interim, she advised employers to “assume the decision will stand, at least for the foreseeable future”. Kathrens added: “We also know the government supported Mr Lock in the appeals, so it is unlikely that the government would seek to change the Court of Appeal decision on including results-based commission in holiday pay.”