It is very difficult for an Executor to understand how the Agency operated and what income was received as quite often the accounts prepared for tax purposes will combine all the Agent’s commission income into one figure whereas ideally we need a breakdown for each Agency of what annual commission was received. Otherwise, we have the painstaking task of going through bank statements and obtaining copies to try to work out what commissions were received.
If there is an Agency Contract it may be possible to claim an indemnity if that is a provision in the Contract. Conversely, if there is no Contract or no indemnity provision in any written Contract, then the Estate can claim compensation. Increasingly, I am finding that smaller claims are better covered by an indemnity contract than a compensation claim because low value compensation claims are difficult to pursue when you have to deduct expenses and the cost of a sales rep to replace the Agent. Unless the Agent is earning more than £35,000 a year, compensation is difficult to pursue whereas an indemnity can be pursued for any commission income received based on the annual average over the last five years of the Agency. Therefore, it is critical to have a copy of each Agency Contract with the Will and MAA leaflet as well as a breakdown of what commission is received from each Agency which should be renewed annually so that all information is readily available to the family and Executors to pursue a claim.
Interestingly, I have recently settled several such claims for the Estates of Agents. Despite the concern that many Agents have that Principals would prefer to pay them nothing, it appears that a number of Agents carried on working despite being terminally ill and as a result the Principals were amenable to paying compensation. These claims are worth pursuing despite the trauma and upset caused by the recent bereavement.
Q I have recently commenced a new Agency during a trial period in a sector where I have worked for many years and have an excellent customer list. The products do not compete with any of my other Principals products and after introducing them to all my customer base, I have now found they are to terminate me at the end of the trial period claiming a ‘change of direction in their sales policy towards Sales Representatives’. I believe I have been treated unfairly. When I raised compensation with the Principal, they said because I had not completed my trial period under the contract I would not be entitled to bring a claim. Is this right?
A Interestingly, this recently came before the European Court of Justice which found in favour of the Agent in the case of Conseils en mise en relations (CMS) SARL v Demeures terre en tradition SARL C645/16 2018.
www.themaa.co.uk
Agents are entitled to compensation or indemnity on termination under Article 17 of the EU Directive and Regulation 17 under the Commercial Agents
(Counsel Directive)
Regulations 1993 in the UK. Article 18 provides certain grounds on which a Principal may not have to pay compensation or indemnity to the Agent. This includes where the Agent is in breach of contract justifying immediate termination of the agreement or where the Commercial Agent terminates the contract, unless the termination was justified by certain circumstances caused by the Principal, or on grounds of age, infirmity or illness where the Agent cannot reasonably be expected to continue its activities. An Agent is also not entitled to payment where he transfers the contract to a third party. The court decided Regulation 18 cannot be interpreted in a way which amounts to adding a ground for the exclusion of the compensation or indemnity payment where there is no express provision made to that effect. This follows a case concerning Volvo cars some years ago.
As the Regulations are clear you cannot derogate from Article 17 or 18 to the detriment of the Agent, the Court found in favour of the Agent who was terminated during the trial period.
The case concerned two French companies with a trial period of twelve months after which the contract would run for an indefinite period. Either party could terminate during the trial period subject to notice.
The Principal terminated the Agent during the trial period on the grounds the Agent had failed to achieve its sales target. The Agent claimed compensation and the French court referred the matter to the European Court of Justice.
The ECJ held that the right to a payment applied during a trial period. A trial period does not change the position that the relationship had been brought to an end by the Principal. This decision obviously helps Agents by ensuring their rights are protected during any probationary or trial period at the beginning of the Contract. It follows other decisions of the ECJ protecting the Agents by making the Directive’s intention to give mandatory protection to Agents and nails one further attempt by Principals to dilute the protections given by the Regulations and Directive.
Disclaimer: This column does not contain legal advice and is for general guidance only.
The MAA, IUCAB, Fieldfisher and the writer accept no liability in connection with the general guidance given in this column.
Larry Coltman, Fieldfisher LLP, Aspen House, Central Boulevard, Blythe Valley Park, Solihull, B90 8AJ Tel: 0121 210 6164. Fax: 0121 210 6499. Email:
larry.coltman@
fieldfisher.com,
www.fieldfisher.com
MAA Agents News 11
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