UK: ECJ Protects Commercial Agent's Rights On Termination During Trial Period

Last Updated: 2 May 2018
Article by Larry Coltman

It has been a debatable issue for many years as to whether a Commercial Agent terminated during any trial or probationary period would be entitled to bring a claim for indemnity or compensation if they were terminated. The European Court of Justice decided this month that Commercial Agents' rights are protected even if the termination of the Agent's contract occurs during the trial period.

The Facts

The case began in France concerning an Agent selling 25 houses per year on behalf of the Principal. The contract had an initial twelve month trial period. Either party was allowed to terminate the contract, subject to notice being given. The Agent was terminated six months after commencement of the contract as the Agent had only made one sale in five months. The Agent had failed to fulfil the terms of the contract target. In France the definition of Commercial Agents is extended beyond that in the UK to cover certain services including the sale of houses. Agents selling some services are protected in several EU countries including France and Germany. The UK Commercial Agents (Council Directive) Regulations 1993 only applies to Agents selling goods.

The Agent sought compensation for the loss resulting from termination of the agency contract from the Principal.

The Law

Under French Law an Agent is entitled to compensation as opposed to an indemnity payment. Most of the EU member states allow an Agent to claim an indemnity which is based on the maximum of the annual average commissions over the last five years of the Agency or shorter period if appropriate. It is subject to deductions for inherited business. In the UK an Agent can be entitled to an indemnity if it is written into the Agency Contract in the UK. Indemnity is different from compensation in that it is based upon the Agent introducing new customers to the Principal or significantly increasing the volume of business with existing customers of the Principal enabling the Principal to continue to derive substantial benefits from the business with those customers. In the absence of an Agency Contract or no indemnity clause in the Contract, the Agent is entitled to compensation. Compensation is based upon a valuation of the Agency.

Compensation is based upon the damage an Agent suffers as a result of the termination of his Agency where termination deprives the Agent of the commission which performance of the Contract would have procured for him whilst providing the Principal with substantial benefits. The Agent may also be able to claim for costs and expenses that he has incurred in the performance of the Contract on the Principal's direction if the Agent is unable to amortise the costs and expenses he incurred.

The Court's view

The French Court of Causation asked the Court of Justice for a decision on whether an Agent that is terminated during the trial period would be entitled to claim indemnity or compensation.

The EU Directive which led to the UK Commercial Agents (Council Directive) Regulations 1993 does not regulate the provision of a trial period. A trial period falls within the scope of the freedom of contract of the parties and is not prohibited by the Directive or Regulations.

The European Court of Justice decided that the Agent cannot be denied the indemnity or compensation on the sole ground that the termination of the Agency Contract occurred during the trial period provided the conditions for the award or the indemnity or compensation set out in the Directive are satisfied. Based upon the wording of the Directive, the indemnity and compensation rules laid down by the Directive are not intended to penalise termination of the Contract but to indemnify the Commercial Agent for his past services from which the Principal will continue to benefit beyond the termination of the Agency or for the costs and expenses he has incurred in providing those services.


This decision will be welcome to Commercial Agents provided they have either introduced new customers or increased sales for the Principal bringing the Principal substantial benefit during the trial period. It will not assist Agents who have achieved no benefit for the Principal nor incurred any expenses they are unable to amortise.

Principals need to be careful in ensuring they provide a list of any existing customers accounts and the turnovers for each account at the commencement of the Agency so it can be clear what business an Agent inherits before commences his trial period. Setting minimum performance obligations or targets are commonly used by Principals to justify termination during the period of the Agency without any risk of paying compensation or indemnity. These terms will continue to be used.

However, Principals who are relying on terminating Agents during a trial period and not having to pay anything need to be wary of this in the light of this decision as there is now no doubt there is no bar to an Agent claiming compensation and loss of any costs and expenses or indemnity upon termination. This is very different from employment law where employees can be at risk of rightful termination of their employment at the end of their probationary period if they do not fulfil the requirements of their employment.

Terminating the employment of a Sales Representative at the end of the probationary period will not be a problem if no sales have been achieved or new customers obtained.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Abbatescianni Studio Legale e Tributario
Reed Smith (Worldwide)
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Abbatescianni Studio Legale e Tributario
Reed Smith (Worldwide)
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions