Sales teams could be at risk from job loses following the latest ruling by the European Court of Justice (ECJ), lawyers have warned.
The ECJ has ruled that holiday payments for workers whose pay comprises a fixed element and a regular commission (eg sales staff) must include an amount that reflects average commission.
This is a significant judgment and is likely to see businesses find other ways to cut costs warns one lawyer in employment practice at international law firm, Taylor Wessing.
Suzanne Tyrrell, senior associate in the employment practice at Taylor Wessing, said: "Today's decision will have a big impact on the costs of hiring employees where commission forms part of the remuneration, and sectors with sizeable sales staff, such as retail and utilities, will be particularly hard hit. While the decision may at first appear to be employee friendly, it's likely that businesses will seek other ways to avoid the additional cost and administrative time in complying with these new requirements – which could include reducing headcount, imposing pay freezes or removing commission payments completely.
"However, these costs are unlikely to have been budgeted for, and it remains to be seen how businesses react."