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

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...