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Search Orders: Nugee goes Nuclear

04/05/2017 | Tom Spiller
On 3 February 2017, Mr Justice Nugee dismissed an application to set aside a search order that had been granted against non-parties in legal proceedings - the first time this has happened. The searc

On 3 February 2017, Mr Justice Nugee dismissed an application to set aside a search order that had been granted against non-parties in legal proceedings – the first time this has happened.

The search order has been described as one of the Court’s two “nuclear weapons” as its consequences are considered to be draconian and oppressive. (The other atomic device is the freezing order, which restricts a Respondent’s rights to deal with his or her own property.) Once granted, a search order required a Respondent to allow an Applicant’s solicitors to enter his or her premises or home to search for, copy and remove specified documents and information.

That this order has been made against a party who is not a defendant to a claim in the English courts makes this decision somewhat remarkable. It is also notable from the perspective of successful claimants hoping to obtain satisfaction from underhanded opponents.

Procedural and Factural Background

The underlying claim was brought by (1) Mr Albert John Martin Abela [“Mr Abela“], (2) Albert JM Abela SRL and (3) Albert JM Abela Catering and Interactive Services Limited [together, the “Claimants“]. Mr Abela was heir to a substantial catering business operating internationally.

In 2002, the Claimants purchased 40% of the shares of an Italian company, Gama Spa [“Gama“], for $14m. Two percent of Gama was owned by the defendant, Mr Ahmad Baadarani, a Lebanese businessman. At the time of the purchase, the Abela group owned the remaining 52% of the balance of Gama shares, while Mr Abela was Gama’s Chairman. The purchase agreement was governed by English law, with disputes arising from it subject to the non-exclusive jurisdiction of the Courts of England and Wales.

The Claimants alleged they were induced to purchase an interest in Gama as a result of fraud by Mr Baadarani and others, who concealed Gama’s true financial position from them.

Mr Abela alleged that, following his father’s death in 1998, he lapsed into depression and that, whilst depressed, and unknown to him, Mr Baadarani conducted the business of Gama so that its assets were substantially diminished. Mr Baadarani had significant interests of his own in Kazakhstan, and used a Kazakh subsidiary to divert Gama’s funds for his own benefit.

In 2009, the Claimants issued what became proceedings in the English courts. Initially, Mr Baadarani defended the claim and disagreed that the English courts had jurisdiction. This question reached the Supreme Court in December 2013. Mr Baadarani lost and was ordered to pay the Claimant’s costs of the appeal, which were substantial.

Mr Baadarani was similarly unsuccessful in defending the underlying claim. On 3 June 2015, after failing to comply with various orders made against him, Chief Master Marsh entered judgement in default against him, for a sum of just over $20m.

Having obtained judgement against Mr Baadarani, the Claimants sought to enforce it. This process proved to be lengthy, not helped by Mr Baadarani’s lack of co-operation and efforts to avoid his liabilities. On 19 June 2014, he was required to attend Court to provide information about his means to aid the enforcement process. During his cross-examination, it became clear that Mr Baadarani had failed to disclose numerous documents. This discovery began a long process of unsuccessful attempts to obtain full disclosure from him.

Eventually, the Claimants obtained a world-wide freezing order against Mr Baadarani and third party disclosure orders against an individual and company that had had dealings with him, being Mr Fakih and Leesdel Limited.

One of the documents disclosed by one of Mr Fakih and Leesdel Limited relating to Mr Baadarani’s possessions included a statement of assets, dated 17 April 2013, which Mr Baadarani had signed. The Claimants understood this had been provided to the National Bank of Kuwait in connection with the re-mortgage of a leasehold property in Hanover Gate Mansions, London.

This document proved to be forged: it has been created in 2015 but was back-dated to 2013, a discovery was made as a result of a separate third party disclosure order the Claimants had obtained from the National Bank of Kuwait.

Following this discovery, the Claimants applied for a search order against both Mr Fakhi and Leesdel Limited. The order was granted. Mr Fakih and Leedsel Limited applied to have it set aside. It was this application that gave rise to the decision of Mr Justice Nugee.

The “Nuclear” Decision

As stated above, search orders are considered to be a remedy of “nuclear” impact. In making such an order against a non-party to proceedings, the Judge was sending a clear signal as to how and when such an order could be used. The importance of the decision is underscored by the fact that this is the first Court decision in this area in at least twenty years.

Mr Fakih and Leesdel Limited’s lawyers argued that the wording of the Civil Procedure Act 1997 (the statute that gives the Court the power to grant search orders) made clear that this power could only be exercised in ongoing “proceedings”. They submitted that, as judgement had been given and the parties were now dealing with enforcement, it was too late to make a search order.

Mr Justice Nugee rejected this argument, and concluded that there was no need for such restrictive interpretation, nor did the authorities (some of which pre-dated the Civil Procedure Act) support that view. The word “proceedings” could include steps taken to enforce a judgement. He found there was no doubt that the Claimants were actively pursuing Mr Baadarani under the judgement, and hoped to obtain information via the search order to identify assets against which to execute that judgement.

In rejecting the application to set aside the search order, Mr Justice Nugee made it clear that he was taking a pragmatic approach.

He also rejected the proposition that a search order could not be granted against a person against whom the Applicant has no cause of action. All that was necessary was for the Respondent to have the relevant evidence in their possession and that there be good reason to grant an order so as to preserve that evidence.

Practical Lessons

In claims involving fraud, a dishonest opponent is often willing to use all manner of underhanded tactics at the pre-action stage, throughout proceedings, and during trial, even to the extent of lying under oath. Such behaviour is unlikely to end at the point at which a judgement is given.

Mr Justice Nugee’s decision strengthens the hand of successful claimants who are still grappling with an opponent after judgement, and shows that the Court will be willing to act in a pragmatic fashion against potential conspirators attempting to help a judgement debtor shield his assets from enforcement. Making search orders against non-parties may be a “nuclear” option, but that does not mean the Court is not willing to use it, if it is persuaded that it is just and fair to do so.

Settlement Agreements: Be careful what you draft for

08/02/2017 | Tom Spiller
For those engaged in High Court litigation, an acceptable offer of settlement is often a great relief which promises to lift the burden of stress and work the process causes. However, the end of the

For those engaged in High Court litigation, an acceptable offer of settlement is often a great relief which promises to lift the burden of stress and work the process causes. However, the end of the recent proceedings brought by Vincent Tchenguiz against the liquidators of Kaupthing Bank, Grant Thornton UK (“GT“), provides a salutary lesson. When considering the terms of which a dispute should be settled, a careful and clear approach should be taken, especially if future, related litigation is contemplated.


The Tchenguiz brothers are globally wealthy British businessmen who began their careers in the Middle East, specifically Iraq and Iran. At various times, their business empire has included the Odeon chain of cinemas, the pub chain Mitchells and Butlers plc, real estate assets and substantial shareholdings in Sainsbury’s, Somerfield and Kaupthing Bank. After that bank’s spectacular implosion at the height of the global financial crisis in 2008 (it was at the time Iceland’s largest bank), a body known as the Resolution Committee appointed GT to recover funds for Kaupthing’s creditors. Following investigations of Kaupthing’s affairs, and a referral of several loans made to companies owned by the Tchenguiz brothers to the Serious Fraud Office (the “SFO“), warrants for the arrest of the Tchenguiz brothers and the search of their Mayfair offices were issued. The collapse of the subsequent police case against the brothers, at the end of which no charges were made, was perhaps as dramatic as the collapse of Kaupthing Bank that gave rise to the SFO investigation, and led to Judicial Review proceedings in the Administrative Court in which the arrest and search warrants were quashed.

The Tchenguiz brothers ultimately reached a negotiated settlement of the proceedings with the SFO. The terms agreed provided that the parties waive any claim or cause of action arising out of or in relation to the dispute between them, whether known or unknown. It also created a group of identified people who were specifically protected from any future law suit and created a category of specific claims that were explicitly released. Additionally, the settlement agreement made clear that it did not relate to future claims between the parties that arose after the date of that agreement.

However, not content with victory against the SFO and his entitlements under the settlement agreement, Vincent Tchenguiz and several trust companies controlled by him (together, the “Claimants“), took further legal proceedings, against Mr Johannes Johannsson of the Resolution Committee and the Committee’s advisors, GT, (together, the “Defendants“). The Claimants alleged malicious conspiracy, stating that the Defendants instigated and then directed the SFO investigation by making false allegations against Mr Tchenguiz. The Claimants said the aim of the alleged conspiracy was to obtain documents and information that would allow the liquidators of Kaupthing to enforce security over assets owned by the brothers’ companies.

Court decisions

Both Mr Johannsson and GT applied for summary judgement in the proceedings and won. Both applications were made on the basis that the terms of the settlement agreement prohibited Vincent Tchenguiz and his companies from making claims against Mr Johannsson and GT. The applications were opposed on slightly different grounds. However, the Judge who heard both applications applied the same reasoning in deciding them.

Mr Johannsson’s application came before the Court first and was opposed on the grounds that (i) the claim against him related to matters arising after the date of the settlement agreement; (ii) the settlement agreement was only signed because of “sharp practice” by which Mr Johannsson had concealed a good claim against him (being the alleged conspiracy to obtain documents and information) in order to benefit from the protection of the settlement agreement; (iii) the doctrine of illegality (i.e. the Court will not allow a person to found a claim or a defence on an illegal act) prevented Mr Johannsson from relying on the settlement agreement because the agreement was the result of a conspiracy between Mr Johannsson and GT; and (iv) there had been a breach of fiduciary duty. This article concerns itself with only issues arising from points (ii) and (iii).

In dismissing the arguments made in relation to “sharp practice”, the Judge referred to the legal principle (as stated in the House of Lords case of BCCI v Ali & others [2001] IKHL 8) that where one party to a settlement does not disclose the existence of a claim against them about which the other was not aware before an agreement is entered into containing a general release (i.e of all claims whether known or unknown), this would be considered unacceptable – the law would then provide a remedy to the wronged party. The Judge concluded that this principle did not apply to the settlement agreement in this case. It was drafted in a sufficiently detailed way. Crucially, it included specific releases of claims in relation to investigations and actions by the authorities and provision of documents and information to authorities, which covered Mr Johannsson.

In respect of illegality, the Judge held that it could not be argued that Mr Johannsson relied on this as the settlement agreement was not an illegal document, as was not the purpose of the agreement (i.e. the end of the dispute) nor the carrying out of the agreement’s obligations. The Judge therefore found that Mr Johannsson was acting legally when relying on the settlement agreement which settled claims alleging illegal conduct.

After losing the summary judgment application made by Mr Johannsson, the Claimants altered their position when opposing GT’s application. This time, “illegality” was the main ground on which the application was opposed (although there were others). The issue of “sharp practice” was presented and decided in the same way. In deciding this issue, the Judge repeated his previous reasoning but added further points:

  • The Claimant’s remedy for suffering loss from a legal contract made by illegal means or a legal contract used for illegal means was damages, as a result of a successful claim for conspiracy – they could not rely on illegality alone to set the settlement agreement aside;
  • It was crucial the Claimants argued that the Court should rule that GT could not enforce the settlement agreement whilst maintaining they themselves could enjoy its benefits – they were seeking partially to set aside the obligations the settlement agreement placed only on them; and
  • If the Courts treated a legal contract as illegal because it was achieved by illegal means on the part of one contracting party, the innocent party to the contract would suffer by not being able to enforce the contract once they learned of the illegal means. However, if the agreement was recognised as legal (even if achieved by illegal means) then the innocent party has the choice of electing to enforce or set the agreement aside. There is no place in the law of England & Wales for an innocent party to a contract to be entitled to call for the provisions of a legal contract that are in his favour to be enforced while the others that are not innocent to be refused enforcement of the contract.


Following the successful applications, the proceedings were brought to a close. However, Vincent Tchenguiz and the other Claimant companies have vowed to appeal the Judge’s decisions.

Practical Lessons

As in any dispute involving personal issues (such as reputation) or substantial amounts of money, it is clear that the perceived harm he suffered as a result of the SFO investigation and insolvency of Kaupthing Bank made this a bitter clash for Vincent Tchenguiz.

In such circumstances, it may be tempting for a party to attempt to leave the door open for continued litigation against individuals they hold responsible for wronging them, either as a deliberate, aggressive strategy or as a cautionary approach to a scenario of incomplete information. The above decisions show that anyone wishing to settle against some but not all protagonists in a dispute will need to pay close attention to the wording of any settlement agreement. Any such agreement would need clearly and frankly to set out future potential claims that are to be preserved, or limit the settlement to disputes that the parties are aware of at a certain time.

Similarly, those settling claims made against them who are holding information up their sleeve that could give rise to future claims against them should either make a clean breast of matters during settlement negotiations or include categories of disputes that are explicitly settled. Failure to do so risks future action in respect of their “sharp practice”.

If the promised appeals of the Judge’s decisions are unsuccessful, this will restrict the abilities of a party to a settlement to rely solely on the doctrine of illegality to overturn an agreement, even if there was a conspiracy to force them to settle. The remedy for any such situation will lie in a separate claim in respect of that conspiracy. Given his apparent appetite for litigation, it may be that Mr Tchenguiz follows this course of action. We shall soon find out.

This article should not be taken as definitive legal advice on any of the subjects covered.  If you do require legal advice in relation to any of the above, please contact Tom Spiller on 020 7955 1444 or any member of the Rosenblatt Dispute Resolution Department.

Predictive Coding – “TAR” very much

04/01/2017 | Louisa Hartley
Since the decision in Pyrrho Investments Limited and another v MWB Property Limited and others EWHC 256 (Ch) permitting the use of predictive coding in an electronic disclosure exercise there has be

Since the decision in Pyrrho Investments Limited and another v MWB Property Limited and others [2016] EWHC 256 (Ch) permitting the use of predictive coding in an electronic disclosure exercise there has been much commentary on predictive coding, also referred to as Technology Assisted Review [“TAR”], and its use in the disclosure process. Prior to that decision, use of predictive coding technology in the English courts had been limited, mainly due to the fact that there was no authority confirming that its use fulfilled a disclosing party’s obligations under the Civil Procedure Rules [“CPR”].

Disclosure under the CPR

The purpose of disclosure is to make available evidence which either supports or weakens the parties’ respective cases in order to assist the Court to fulfill the overriding objective of dealing with cases justly and at a proportionate cost. Parties are required to undertake a “reasonable search” for documents (CPR r31.7) which meet the test of standard disclosure. This includes electronic documents such as emails and computer files.

What is reasonable is decided by reference to a number of factors (set out in CPR r31.7(2)), specifically:

(a) the number of documents to be searched;

(b) the nature and complexity of the proceedings;

(c) the ease and expense of retrieval of any particular document; and

(d) the significance of any document which is likely to be located during the search.

There are additional factors that determine what is a reasonable search of electronic documents such as consideration as to the availability and location of electronic documents and the cost and likelihood of recovering them (Practice Direction 31B).

What is predictive coding?

Predictive coding is used in the electronic disclosure process in litigation. It is computer software which identifies electronic documents that meet the test of standard disclosure. It aims to streamline the document search and review process and, in doing so, to reduce the costs and the time which would otherwise be spent manually reviewing documents.

Predictive coding is a distinct form of TAR in that it is a continuous learning mechanism, as opposed to merely using technology to search for keywords in documents to consider whether certain document should be disclosed or not. The increasing use of TAR and now predictive coding in place of human manual review of documents in the disclosure exercise is due to the fact that it is just as, if not more, accurate than manual review and in the majority of cases costs less time and money.

How it works

Predictive coding combines human expertise with data analysis to create an algorithm by which relevant and non-relevant documents are identified, categorised and flagged.

In practice, the parties will first agree a set of guidelines to define the data size, criteria for inclusion of documents and a margin of error. Documents are then uploaded onto an electronic review platform and a representative sample is selected to train the software. A manual review of the documents produced by the software is carried out by a solicitor who categorises them as relevant or not-relevant. Predictive coding software then analyses the sample and scores the relevancy of documents to the case based on common concepts and the language included. The remaining documents are then reviewed by the software and categorised as either relevant or not relevant.


  • Avoids manual review of a large number of irrelevant documents therefore saving time and costs.
  • The number of documents in review is not directly proportionate to the costs i.e. doubling the number of documents does not double the cost of reviewing them.
  • Documents which are relevant in the case can be identified quicker than if each were reviewed manually.


  • Predictive coding does not work with non-text-searchable documents and mainly numerical content.
  • Where there is a high proportion of relevant documents the time and cost savings will not be as significant.
  • It is not always 100% accurate.

The decision in Pyrrho

Master Matthews highlighted in his judgment that whilst the CPR and its Practice Directions contemplate the search for electronic documents, neither deal with the question as to how these should be searched. The Master did note however that PD31B does mention the use of “automated methods” or “automated search techniques” in the search for electronic documents.

The number of electronic documents under review in Pyrrho amounted to over 17 million. After de-duplication that number was still 3.1 million. Drawing on the decisions of the US Federal Court case of Moore v Publicis Groupe, 11 Civ 1279 in which there were over 3 million documents to be reviewed and the Irish High Court case of Irish Bank Resolution Corporation Ltd v Quinn [2015] IEHC 175 in which there were over half a million documents after de-duplication, Master Matthews considered that the use of predictive coding was appropriate. Included in the factors he listed in his Judgment as being in favour of the use of TAR were:-

  1. The parties had agreed on the use of predictive coding software, subject to the Court’s approval.
  2. There is no evidence that predictive coding is less accurate than manual review and, in fact, there was evidence that it was more accurate in some cases.
  3. There is nothing in the CPR or its Practice Directions prohibiting its use.
  4. The number of electronic documents to be reviewed in the case was “huge” and the cost of manually searching for these would be “enormous”. The highest cost estimate given to use the technology was £469,049 plus monthly hosting costs of £20,820 which Master Matthews considered as “far less expensive than the full manual alternative”.
  5. The value of the claim was tens of millions of pounds and therefore the costs of using the software were proportionate

Although each case will turn on its own facts, the implication of the judgment in Pyrrho is that there is now judicial authority for parties to use predictive coding in e-disclosure where it is considered appropriate. The more recent case of Brown v BCA Trading Ltd [2016] EWHC 1464 (Ch) affirms the Court’s view that technology is sometimes a better alternative to traditional methods. In that case, the Court ordered the use of predictive coding against the Claimant’s wishes. Over £20,000,000 was being claimed with the cost of predictive coding estimated to be around £132,000 and the cost of traditional review £250,000.

The Court considered the factors identified by Master Matthews in Pyrrho and made an order for the use of TAR. Consequently, even where the parties do not agree to predictive coding, the Court may order its use in disclosure where the arguments in favour far outweigh those against it. It may well transpire that TAR will become the norm, unless there is a compelling reason not to use it.

If you would like any further information, please contact Simon Walton on 0207 955 1455.

This article should not be taken as definitive legal advice on any of the subjects covered. If you do require legal advice, please contact Rosenblatt as above.  

New Apprenticeship Levy

14/12/2016 | Andrea London
As announced in the Summer 2015 budget, those companies with an annual UK pay bill of over £3m will be obliged to pay the government's new apprenticeship levy. The levy is a key element of the gover

As announced in the Summer 2015 budget, those companies with an annual UK pay bill of over £3m will be obliged to pay the government’s new apprenticeship levy. The levy is a key element of the government’s plan to fund three million new Apprenticeships in England by 2020.

The levy is due to come into force from 6 April 2017 and it will be mandatory and require employers to invest in apprenticeships. The size of such investment will be calculated in relation to the size of the company’s UK payroll bill.

How will levy contributions be calculated?

The levy will be required to be paid by all employers with a gross annual pay bill of more than £3m. A company’s levy contribution will be paid against the total gross bill at a rate of 0.5 per cent, minus an annual levy allowance of £15,000 to offset against this. In addition to the amount payable by the employer, the Government will apply a 10 per cent ‘top up’. Therefore, for every £1 paid in to the fund, the employer will have £1.10 to spend.

Levy payment will be collected by HMRC through the PAYE system. Employers will have to calculate, report and pay the levy to HMRC through the PAYE process, alongside any tax and NICs. Each month, the employer will have to inform HMRC whether it needs to pay the apprenticeship levy and if so, include it within the usual PAYE payment.


A company with an annual pay bill of £10m and will be obliged to contribute an annual levy payment of £35,000. This contribution is calculated as follows:

  • Annual gross pay bill of £10,000,000
  • Apprenticeship levy calculated at 0.5% of £10,000,000 = £50,000
  • Less the £15,000 apprenticeship levy allowance = £35,000 annual payment

What will happen to the money once the levy has been paid?

Once an employer in England has registered and paid the levy, it will then be able to access apprenticeship funding through a digital apprenticeship service account. The account will allow employers to effectively “reclaim” their levy contributions as digital vouchers, which can then be used to select and pay for Government approved training providers, post apprenticeship vacancies and to search for candidates. Companies will have up to 24 months to spend the vouchers, after which any unspent funds in the digital account will expire.

As apprenticeships are a devolved responsibility, Scotland, Wales and Northern Ireland have their own, separate arrangements in place.

What can the levy fund be spent on? 

The levy contributions can only be used for Government approved apprenticeships, which includes both the new approved standards and Trailblazer Apprenticeships. The levy fund must be spent on training and assessment with a recognised and registered apprenticeship training provider, those training providers with an inadequate Ofsted rating will not feature on the approved register.

Unless an organisation becomes its own training provider and draws down the funds, employers will also be unable to use the levy for internal training. In order to become a training provider, the company would be subject to the appropriate inspections and would need to officially register as a training organisation.

Digital funds and government funding cannot  be used for:

  • apprentice wages or expenses;
  • trainee or workplace programmes;
  • the costs of setting up an Apprentice programme.

Opportunities for smaller companies

Employers with a pay bill of less than £3m will not have to pay the levy, but will be able to benefit from the fund. When the new funding system begins, non-levy payers will be able to choose an approved training and assessment provider. In a scheme known as ‘co-investment’, the company will only be expected to contribute 10% of the cost of training, with the government paying the remaining 90%. For now, SMEs will pay the training provider directly and will not need to use the digital apprenticeship service account until at least 2018.

What next?

Given the mandatory nature of the levy, employers with a £3m+pay bill will need to ensure that their business is in a position to benefit from its own contributions. Rather than be disadvantaged by levy payments, companies should begin to consider either introducing apprenticeships or developing current programmes in order to recover the monies they have been required to pay in.

If you would like any further information, please contact the Employment Department on 0207 955 0880.

This article should not be taken as definitive legal advice on any of the subjects covered. If you do require legal advice, please contact the Employment Department as above. 

Holiday pay & commission: the Court of Appeal judgment in Lock v British Gas [2016]

20/10/2016 | Andrea London
On Friday 7 October 2016, the Court of Appeal handed down the decision in British Gas Trading Limited v. Lock and Another EWCA Civ 983. As expected, the Court of Appeal followed the Employment Appea

On Friday 7 October 2016, the Court of Appeal handed down the decision in British Gas Trading Limited v. Lock and Another [2016] EWCA Civ 983. As expected, the Court of Appeal followed the Employment Appeal Tribunal’s decision that holiday pay must include compensation for results-based commission that “ordinarily” would have been earned during periods of work. The case is important as it has potentially significant financial implications for those employers that utilise commission schemes or whose employees have remuneration packages which include additional payments that are intrinsically linked to their jobs, for example overtime payments.

Background in brief

In April 2012 Mr Lock, a salesman for British Gas, presented a claim to the Employment Tribunal. He argued that British Gas had failed to correctly calculate his holiday pay. In addition to his basic salary, Mr Lock was each month paid a sum in respect of his results-based commission. Such commission payments represented more than 60% of his remuneration and were not dependent on the amount of work that Mr Lock had done, rather the success of that work.  In Mr Lock’s case, his entitlement to commission was based on how many of the sales he negotiated which resulted in the customer purchasing British Gas’ energy products.  Although British Gas’ commission scheme was set out in a document separate to his employment contract, it was agreed that Mr Lock had a contractual right to such commission.

The European Court of Justice (“ECJ”) had previously rejected British Gas’ claim that Mr Lock’s holiday pay was comparable to his earnings during periods of work. The company had argued that his holiday pay already included both basic salary and commission payments. Whilst on leave, Mr Lock continued to receive his salary and commission relating to sales he had achieved during the weeks preceding his holiday. However, the court recognised that by taking holiday, Mr Lock’s future remuneration would be disadvantaged as, whilst on leave, he had been unable to generate any commission.  In the ECJ’s view, this might deter such a worker from taking his annual leave. The ECJ ruled that where commission is intrinsically related to the work carried out, it should be considered when calculating holiday pay.

The Court of Appeal

The key issue deliberated by the Court of Appeal (‘CoA’) was whether the UK Working Time Regulations 1998 (‘WTR’) could be interpreted to give effect to EU case law, which requires holiday pay, payable under the Working Time Directive, to include “all elements of normal pay”.  In Mr Lock’s case this would include his results-based commission. The CoA agreed with the EAT and confirmed that the WTR can (and should) be read in a way that accommodates the EU interpretation of holiday pay.


The CoA has therefore now determined that holiday pay must include compensation for results-based commission that would ordinarily have been earned, but for an employee taking annual leave.  The decision applies solely to those workers who have normal working hours and whose pay does not vary according to the amount of work done, rather due to the outcome of such work. It should be noted, however, that the decision to include commission in holiday pay is not intended to be applicable to staff who receive a discretionary bonus based on organisational goals or team performance.

Next steps

Although British Gas’ position is yet to be confirmed, since it has approximately 1,000 workers with potential claims, it is expected to appeal the decision to the Supreme Court. However, despite the potential for appeal, employers will now be required to include relevant commission payments in any holiday pay remuneration and may face significant claims for back pay.

If you would like any further information, please contact the Andrea London of the Employment Department on 0207 955 0880. This article should not be taken as definitive legal advice on any of the subjects covered. If you do require legal advice, please contact us.

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