British Gas Trading Ltd v Lock & Anor

Domestic legislation implementing an EU directive must, so far as possible, be interpreted conformingly. The obligation is broad and may permit words to be implied, provided that the interpretation remains compatible with the legislation’s underlying thrust and does not require an inappropriate legislative choice.

The Employment Appeal Tribunal will ordinarily follow a recent decision of its own as persuasive authority. Departure requires per incuriam, inconsistent authority, manifest error, or other exceptional circumstances. A conforming construction of regulation 16 may treat results-based commission as remuneration varying with the amount of work done, so that statutory annual-leave pay complies with Article 7.

Mr Lock was employed as a salesman on a basic salary plus results-based commission. During annual leave he received basic salary and commission previously earned, but could not generate new commission. He brought an unlawful-deduction claim, alleging that this method of holiday pay was incompatible with Article 7 of Council Directive 2003/88/EC.

Following a reference in the same proceedings, the Court of Justice had authoritatively decided the EU-law issue. The Employment Tribunal held that domestic law could be read conformingly by adding wording to regulation 16 of the Working Time Regulations 1998. British Gas appealed. The central issue was whether that conforming interpretation was legally possible and whether the EAT should follow Bear Scotland.

1. Appeal dismissed. The Tribunal followed Bear Scotland & Others v Fulton & Others [2015] ICR 221. That decision was not distinguishable merely because it concerned non-guaranteed overtime while this case concerned results-based commission. Section 234 of the Employment Rights Act 1996 defines normal working hours but does not supply a relevant distinction in the operation of sections 221–223 and regulation 16.

2. The Court of Justice’s interpretation of Article 7 was binding. It required commission intrinsically linked to the performance of contractual tasks to be reflected in annual-leave pay. The remaining domestic question was therefore whether regulation 16 and the statutory week’s-pay provisions could be construed conformingly.

3. The applicable interpretative obligation was broad and far-reaching. It was not confined by ordinary literal construction or ambiguity, and could permit implied words. Its limits were that the meaning must go with the grain and underlying thrust of the legislation, must not contradict a cardinal feature, and must not require decisions for which a court is not equipped.

4. Bear Scotland had correctly concluded that a conforming construction was available. The earlier Court of Appeal reasoning in Bamsey rested on an understanding of the Directive that subsequent European authority had displaced. It did not identify a fundamental legislative feature preventing conforming interpretation.

5. Although not strictly bound by its own decisions, the EAT would generally follow them. None of the recognised grounds for departure applied: Bear Scotland was not per incuriam or manifestly wrong, no inconsistent authority was material, and no exceptional circumstances justified reopening the substantive issue. The Tribunal’s conforming reading of regulation 16 therefore stood.

• Employment Appeal Tribunal: British Gas’s appeal was dismissed.
• Employment Tribunal, Leicester: Held that regulation 16 of the Working Time Regulations 1998 could be interpreted conformingly with Article 7 of Council Directive 2003/88/EC, and read additional wording into regulation 16(3).