The Maritime and Commercial High Court in Denmark ruled on the approach that employers can take when calculating compensation for loss of commission during holiday.
The court ruled on three combined cases, basing its decision on an interpretation of a provision in the Danish holiday act that deals with when employees paid based on commission are assumed to have lost commission due to taking a holiday. According to the court, an employee who loses commission because of taking holiday is entitled to compensation.
The court held that two conditions must be met for the employee to be entitled to compensation: First, the commission must constitute a “considerable part of the salary.” Second, “the loss of commission must be due to taking of holiday.”
In two of the cases, a majority of the court found that the employees’ physical presence in the workplace was necessary to earn commission as sales took place there. Consequently, earning commission was conditional on the employee being physically present at the workplace and it was therefore not possible to earn a commission during a holiday. As such the employees were entitled to be compensated for the lost commission.
In the last case, the court found that the condition for compensation for loss of commission due to a holiday had not been met. The employee earned commission from his own customers in his fixed district. He also earned commission from his own customers when his colleagues made sales to these customers during his absence on a holiday.
Earning commission was therefore not conditional on his being physically present, and he could still earn commission while on holiday. Also, the customers were often willing to wait for him to return from holiday. His absence due to a holiday therefore only affected his earning of commission to a very limited extent, and he was not entitled to additional compensation.
Comment
The judgments show that if the potential to earn commission is reduced due to a holiday, for instance if it is necessary to be present at the workplace in order to earn a commission, the employee will be entitled to compensation.
Written by Marianne Lage of Horten and Roger James of Ogletree Deakins
© 2020 Horten and Ogletree, Deakins, Nash, Smoak & Stewart, P.C.