It is no secret that many Umbrella Company Employees and other independent professionals from the UK’s contracting community frequently rely on recruiters to match them with the best assignments; however, a new ruling from the Court of Justice of the European Union (CJEU) could see a serious impact on many recruitment firms.
The ruling arose from the case of a British Gas employee who was paid on a regular commission basis for any sales he made. After taking his annual leave, he was paid less for several months because he made zero sales whilst on vacation. The CJEU ruled that this worker’s employer should have taken holiday pay into account when designing his commission-based remuneration package, as “he may have been deterred from exercising his right to annual leave”.
The Association of Professional Staffing Companies (APSCo) was quick to respond to the ruling, with its head of external relations, Sam Hurley, stating: “This is obviously a huge issue for any commission-based sales environment and will consequently have a serious impact on recruitment firms that may now have to think seriously about how remuneration packages are structured – and potentially how they may need to be changed. We are very concerned by this ruling and have alerted our members.”
Ms Hurley described the CJEU’s failure to expand on its ruling to clarify precisely how holiday pay should be calculated as “unhelpful”, leaving it up to UK courts to decide. Yet again, she continued, recruiters “are faced with uncertainty as to how to interpret the legislation, and we will need to await case law to give some clarity.”