Like me, you may not exactly hang on every word which comes out of the European Court of Justice and I’m not sure anyone is going to blame us.
But one potentially very significant judgment which will interest many, particularly in those in sales, was published largely unnoticed by a quintet of judges in Luxembourg last week.
Put simply, if you employ staff on a salary plus commission basis you probably owe them money. And potentially quite a lot. The ruling came about after a Leicester employment tribunal referred a case involving a British Gas worker known only as Mr Z R J Lock and his employer “up the chain” to Europe.
Their Lordships and Her Ladyship in the Grand Duchy backed Mr Lock’s argument that his holiday pay ought to reflect the commission payments he would have earned had he been at work, rather than just the base salary he was actually paid.
“As British Gas conceded at the hearing, the worker does not generate any commission during the period of his annual leave . . . ” the judgment noted.
“In the period following that of his annual leave the worker is paid only reduced remuneration comprising his basic salary. That adverse financial impact may deter the worker from actually taking that leave.
“Such a reduction in a worker’s remuneration in respect of his paid annual leave, liable to deter him from actually exercising his right to take that leave, is contrary to [EU directives].”
Mr Lock’s is one of a number of similar cases going through the system, with two more expected to consider the potential impact of habitual overtime on holiday pay later this summer.
But the preliminary judgment which has been reached suggests employers will have to calculate and add an average commission payment to base salary for holiday pay purposes. Those future rulings on overtime could also force companies to recognise a holidaying employee’s inability to work over and above their allotted hours by paying them for time they may have worked had they been there.
Full credit to Mr Lock for going the distance and standing up for his rights. Logic dictates that he is right just as holiday entitlement is calculated over a full year, holiday pay must also reflect an employee’s typical weekly efforts over a 12-month period.
But the case looks like it could cause a major headache for firms, who could stand to receive unexpected and costly claims for back pay from millions of workers.
In some quarters, it has been suggested that the total liability could run to billions of pounds. Workers at John Lewis and Waitrose have already received a total of £40 million after the partnership pre-empted the European Court and scored some good PR into the bargain.
But multiply that sort of cost across thousands of companies and the implications could be severe, particularly for smaller firms without the wherewithal to absorb the unexpected expenditure.
And it’s not yet clear how far back claims could go. The relevant directive was introduced in Scotland five years ago but lawyers may yet be able to argue that liability can stretch as far back as 1998, when the EU’s Working Time Directive was first introduced.
The situation has definite echoes of the PPI scandal our high street banks are still paying for. And like PPI, it all promises recompense for those short-changed, potentially considerable charges for companies and more work for law firms.
* Scotland celebrated Apprentice Week earlier this month, and the event remains a valuable and worthy exercise in raising the profile of a host of opportunities for both school-leavers and employers.
But we should remember an apprentice is for life, not just a week in mid-May.
Scotland’s youth unemployment record is poor, and every effort must be made to improve it at all times of the year. That is why it’s so encouraging to report on the efforts of Scottish Business in the Community, Semta and the Institution of Mechanical Engineers today.
A working apprentice system is a vital component of a working labour market, and as a society we must do all we can to encourage it.