Annual Leave pay calculation with bonus and commission

Giliador

Hello 

I have a fixed annual salary, in addition I'm getting variable quarterly bonus and additional variable commission, however when my employer is calculating AL pay he will only include my fixed annual salary and not the other. However in one of the guide he emailed it stated "Holiday pay should be paid at the workers normal rate of pay – this means that regular overtime, bonus and commission that a worker would receive for time worked should be included in the calculation for holiday pay." So my question is Should AL pay include total income and not just fixed or it depends on type of bonus?. I did email him, he replied saying "he will look in to it" but he never did. I have been working for the company for over 10 years.   

Penguin_

If you get paid a salary, your holiday pay is rolled up into that figure.

DE_612183

From the statement you have made the bonus and commission you refer to is "variable" not "regular / guaranteed".

I'm not sure how you could calculate how much holiday pay you could get for something that's described as Variable?

If one week you got commission of  £100 and another you got £10,000 - what would you expect to get for a week you take off?

Marcon

Penguin_ said:

If you get paid a salary, your holiday pay is rolled up into that figure.

'Rolled-up' holiday pay is when an employer spreads holiday pay over the year, by adding an amount on top of someone's normal pay. This is instead of paying someone for their holiday when they take it. 

For leave years that started on or after 1 April 2024, employers can choose to use rolled-up holiday pay. This applies to irregular hours workers and part-year workers only - OP isn't either.

Undervalued

Giliador said:

Hello 

I have a fixed annual salary, in addition I'm getting variable quarterly bonus and additional variable commission, however when my employer is calculating AL pay he will only include my fixed annual salary and not the other. However in one of the guide he emailed it stated "Holiday pay should be paid at the workers normal rate of pay – this means that regular overtime, bonus and commission that a worker would receive for time worked should be included in the calculation for holiday pay." So my question is Should AL pay include total income and not just fixed or it depends on type of bonus?. I did email him, he replied saying "he will look in to it" but he never did. I have been working for the company for over 10 years.   

Yes, well sort of!

A bonus, almost by definition, is not fixed or guaranteed otherwise it is not really a bonus at all!

Are there any circumstances where you would not get this "bonus". Is it linked to the company's profits? Or to your sales (or performance measured in some other way)? Is it simply paid (or not) at the management's discretion?

If any of the above apply it is unlikely to be "normal pay" so wouldn't entitle you to additional holiday pay.

But the devil is in the detail.

Giliador

DE_612183 said:

From the statement you have made the bonus and commission you refer to is "variable" not "regular / guaranteed".

I'm not sure how you could calculate how much holiday pay you could get for something that's described as Variable?

If one week you got commission of  £100 and another you got £10,000 - what would you expect to get for a week you take off?

There is an example in the guide he emailed. It's calculated on previous 52 weeks, if you have two employees earning 50K, one of fixed and another on 30K salary plus 20K bonus/commission it would put the other at disadvantage for only calculating AL on 30k for one and 50k other when both earnd same amount. 

Undervalued

Giliador said:

DE_612183 said:

From the statement you have made the bonus and commission you refer to is "variable" not "regular / guaranteed".

I'm not sure how you could calculate how much holiday pay you could get for something that's described as Variable?

If one week you got commission of  £100 and another you got £10,000 - what would you expect to get for a week you take off?

There is an example in the guide he emailed. It's calculated on previous 52 weeks, if you have two employees earning 50K, one of fixed and another on 30K salary plus 20K bonus/commission it would put the other at disadvantage for only calculating AL on 30k for one and 50k other when both earnd same amount. 

Yes but a hard and fast contractual entitlement to commission is different to a discretionary bonus. If you are entitled to extra money, subject to meeting certain quantifiable conditions, then generally that would attract holiday pay. A bonus that may or may not be awarded at the firm's discretion, generally doesn't.

The law allows employers very wide discretion on bonuses (and sick pay etc) if the contract classes them as discretionary. The only exception is if the discretion is so far off any reasonable mark as to be regarded as "perverse".

DE_612183

Giliador said:

DE_612183 said:

From the statement you have made the bonus and commission you refer to is "variable" not "regular / guaranteed".

I'm not sure how you could calculate how much holiday pay you could get for something that's described as Variable?

If one week you got commission of  £100 and another you got £10,000 - what would you expect to get for a week you take off?

There is an example in the guide he emailed. It's calculated on previous 52 weeks, if you have two employees earning 50K, one of fixed and another on 30K salary plus 20K bonus/commission it would put the other at disadvantage for only calculating AL on 30k for one and 50k other when both earnd same amount. 

The problem is that you don't have two employee earning £50k a month, you have one on £50k and one on £30k, the fact that the one on £30k meets certain criteria to increase their actual take home doesn't matter.

Normally annual leave is based on service not wage.

DullGreyGuy

What is the quarterly bonus based on? Ours was up to 2.5% of salary and so made no difference if you took holiday or not (even if it was unpaid holiday) you still got the up to 2.5% 

For regular commissions then the average over the last 52 weeks should be paid on top for 4 of your weeks holiday, so for a minimum of 1.6 weeks it will be basic pay only.  If you've worked less than 52 weeks then it should be the average over the whole time you've worked there.

Have to say commission has only ever been a token part of my income over the years but its never been included but according to ACAS its required to be. Does seem as if it's open to being gamed if you are in an industry with very cyclical commissions and you join a little before peak season.