Z.J.R. Lock v British Gas Trading Limited.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• Writing for the Court: Levits
• ECLI: ECLI:EU:C:2014:351
• Date: 22 May 2014
• Docket Number: C‑539/12
• Procedure Type: Reference for a preliminary ruling

JUDGMENT OF THE COURT (First Chamber)

22 May 2014 ( *1 )

‛Social policy — Organisation of working time — Directive 2003/88/EC — Right to paid annual leave — Composition of remuneration — Basic salary and commission according to turnover realised’

In Case C‑539/12,

REQUEST for a preliminary ruling under Article 267 TFEU from the Employment Tribunal, Leicester (United Kingdom), made by decision of 16 November 2012, received at the Court on 26 November 2012, in the proceedings

Z.J.R. Lock

v

British Gas Trading Limited,

THE COURT (First Chamber),

composed of A. Tizzano, President of the Chamber, A. Borg Barthet, E. Levits (Rapporteur), M. Berger and F. Biltgen, Judges,

Advocate General: Y. Bot,

Registrar: L. Hewlett, Principal Administrator,

having regard to the written procedure and further to the hearing on 13 November 2013,

after considering the observations submitted on behalf of:

— Mr Lock, by M. Ford and S. Cheetham, Barristers, instructed by C. Belich, Solicitor,

— British Gas Trading Limited, by J. Cavanagh, Barrister, and S. Rice-Birchall, Advocate,

— the United Kingdom Government, by L. Christie, acting as Agent, assisted by S. Lee, Barrister,

— the European Commission, by M. van Beek, acting as Agent,

after hearing the Opinion of the Advocate General at the sitting on 5 December 2013,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of Article 7 of Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time (OJ 2003 L 299, p. 9).

2 The request has been made in proceedings between Mr Lock and his employer, British Gas Trading Limited (‘British Gas’) concerning remuneration received during his paid annual leave.

Legal context

European Union law

3 Article 7 of Directive 2003/88, headed ‘Annual leave’, is worded as follows: ‘1. Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice. 2. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.’

United Kingdom law

4 Regulation 16 of the Working Time Regulations 1998 provides: ‘Payment in respect of periods of leave 1. A worker is entitled to be paid in respect of any period of annual leave to which he is entitled …, at the rate of a week’s pay in respect of each week of leave. 2. Sections 221 to 224 of the 1996 Act [(Employment Rights Act 1996)] shall apply for the purpose of determining the amount of a week’s pay for the purposes of this regulation …’

5 The Employment Rights Act 1996 provides, in section 221: ‘221 — General (1) This section … [applies] where there are normal working hours for the employee when employed under the contract of employment in force on the calculation date. (2) …, if the employee’s remuneration for employment in normal working hours … does not vary with the amount of work done in the period, … (3) ..., if the employee’s remuneration for employment in normal working hours … does vary with the amount of work done in the period, the amount of a week’s pay is the amount of remuneration for the number of normal working hours in a week calculated at the average hourly rate of remuneration payable by the employer to the employee in respect of the period of twelve weeks ... (4) In this section references to remuneration varying with the amount of work done includes remuneration which may include any commission or similar payment which varies in amount.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

6 Since 2010 Mr Lock has been, and continues to be, employed by British Gas as an Internal Energy Sales Consultant. His task is to persuade business clients to buy his employer’s energy products.

7 His remuneration consists of two main components. The first is a basic salary and the second commission. During the period at issue, the basic salary was a fixed amount of 1222,50 sterling pounds (GBP) per month.

8 The commission, also payable on a monthly basis, is variable. It is calculated by reference to the sales achieved and therefore depends not on the amount of time worked but on the outcome of that work, namely the number and type of new contracts concluded by British Gas. Commission is paid not at the time that the work which generated the commission was done, but several weeks or months following the conclusion of the sales contract with British Gas.

9 Mr Lock was on paid annual leave from 19 December 2011 to 3 January 2012.

10 For December 2011, his remuneration was composed of the basic pay of GBP 1 222.50 and commission which he had earned over previous weeks amounting to GBP 2350,31. In 2011, Mr Lock earned on average monthly commission of GBP 1912,67.

11 Given that Mr Lock did not carry out any work during his period of annual leave, he was not able to make any new sales or follow up on potential sales during that period. Accordingly, he was not able to generate commission during that period. Since this had adverse effects on the salary Mr Lock received during the months following his annual leave, he decided to bring an action before the referring tribunal for outstanding holiday pay in respect of the period from 19 December 2011 to 3 January 2012.

12 In those circumstances, the Employment Tribunal, Leicester, decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) Where: — a worker’s annual pay comprises … basic pay and commission payments made under a contractual right to commission; — the commission is paid by reference to sales made and contracts entered into by the employer in consequence of the worker’s work; — commission is paid in arrears and the amount of commission received in a given reference period fluctuates according to the value of sales achieved and contracts entered into and the time of such sales; — during periods of annual leave, the worker does not undertake any work that would entitle him to those commission payments and accordingly does not generate commission in respect of such periods; — during the pay period which includes a period of annual leave, the worker is entitled to basic pay and will continue to receive commission payments based on commission earned earlier; and — his average commission earnings over the course of the year will be lower than they would be if the worker had not taken leave, because, during the leave period, he will not have undertaken any work that would entitle him to commission payments, does Article 7 of [Council] Directive 93/104/EC [of 23 November 1993 concerning certain aspects of the organisation of working time (OJ 1993 L 307, p. 18)], as amended by Directive 2003/88 …, require that Member States take measures to ensure that a worker is paid in respect of periods of annual leave by reference to the commission payments he would have earned during that period, had he not taken leave, as well as his basic pay? (2) What are the principles which inform the answer to Question 1? (3) If the answer to Question 1 is “Yes”, what principles (if any) are required to be adopted by Member States in calculating the sum that is payable to the worker by reference to the commission that the worker would or might have earned if he had not taken annual leave?’

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