Business owners must take into account commission payments when they calculate holiday pay for employees, NHBF warns

An Employment Tribunal has this week ruled that UK law must reflect a decision from the European Court of Justice, which said commission payments should be included in holiday pay calculations if a worker’s total pay usually includes commissions.

Hilary Hall NHBF chief executive said: “We have long been advising salon owners to include commissions in their holiday pay calculations. There is little detail yet on how employers should calculate this, so we are continuing to advise salons owners to look over the last three months and use the average to calculate a fair holiday pay rate for employees who receive commission.

“It’s good news that a resolution has been reached on this long debated topic.  But the decision will push up wage bills for any business owners who have not previously taken commissions into account when calculating holiday pay.

Last November an employment tribunal ruled that compulsory overtime has to be included when calculating holiday pay, although this is going to appeal.  As many salons don’t pay compulsory overtime, this earlier ruling is less likely to affect salon owners than the new ruling on commissions.   

As holiday pay is an area where salon owners increasingly need advice, the NHBF has produced a new factsheet for members on calculating holiday pay members.nhf.info/advice-and-resources/.