The European Court of Justice, on November 21, 2018, issued a decision (in the case C-452/17) concerning the definition of commercial agent, as per Article 1 of the EC Directive 86/653, with respect to the performance of the activity on an “itinerant manner” and to the performance of further activities other than the negotiation (and conclusion) of the sale or purchase of products for the principal.
The case concerned the position of Zako SPRL, a Belgian limited liability company (“Société privée à responsabilité limitée” - SPRL), which performed several activities on behalf of another Belgian company, Sanidel SA, between 2007 and 2012, based on an unwritten agreement terminated by Sanidel on 30/10/2012.
Following a request for commissions and indemnities proposed by Zako, as a consequence of the termination of the relationship by Sanidel, a dispute arisen between the parties also related to the classification of the contract. In two instances before the Belgian labour Court, qualification as employment was excluded, leaving open the question of whether it was an agency contract or a works contract: in particular, Zako claimed that it was a works contract, while Sanidal claimed that the relationship should be qualified as a commercial agency contract and Zako should be deemed to have lapsed from the one-year period for claiming indemnity.
The Tribunal de Commerce de Liège, with decision of 20 July 2017 referred to the ECJ the following questions for interpretation of the EC Directive 86/653:
1) Must Article 1(2) of [Directive 86/653] be interpreted as requiring the commercial agent to seek and visit customers or suppliers outside of the business premises of the principal?
2) Must Article 1(2) of [Directive 86/653] be interpreted as requiring the commercial agent to carry out no tasks other than those relating to the negotiation of the sale or purchase of goods on behalf of the principal or to the negotiation and conclusion of such transactions on behalf of and in the name of the principal?
3) If the second question is answered in the negative, must Article 1(2) of [Directive 86/653] be interpreted as requiring the commercial agent to carry out tasks other than those relating to the negotiation of the sale or purchase of goods on behalf of the principal, or to the negotiation and conclusion of such transactions on behalf of and in the name of the principal, only secondarily?
The circumstances referred by the Belgian Court, were the following:
“Zako carried out the following tasks on behalf of Sanidel: selection of products and suppliers, determination of commercial strategy, meeting clients, drafting kitchen plans, calculating quotes, negotiating prices, signing for orders, taking measurements off-site, settling disputes, managing staff in the department (secretary, salespeople and fitters); creating and managing of website for online sales; developing sales to distributors, real estate developers and contractors; negotiating and finalising subcontracts on behalf of Sanidel.
Zako received a monthly lump sum of EUR 5 500 plus travel expenses and an annual commission whose amount varied between EUR 5 197.53 and EUR 30 574.19 in the period at issue in the main proceedings.
Zako’s representative had a permanent work station with a direct telephone line and email address at Sanidel’s premises.
It is common ground that that representative performed his tasks with complete independence.”
The ECJ answered to the first question, stating that:
The three necessary and sufficient conditions for a person to be classified as a ‘commercial agent’ are:
- that person must be a self-employed intermediary;
- the contractual relationship must be of a continuing character;
- the activity may consist either simply in being an intermediary for the sale or purchase of goods or in both acting as intermediary and concluding sales or purchases of goods.
Therefore, in the absence of a specific provision requiring the performance of the activity in an itinerant manner external to the principal’s premises, the protection provided by the Directive can also be extended to persons who perform their activity in the principal’s premises.
However, such situation must not affect the independence of the agent: namely, if the presence of the agent in the principal’s premises leads to (i) a subordination to the principal’s instructions or (ii) material advantages for the agent, in terms of the organization of his activity and the economic risk associated with it, the referring Court may get to the opposite conclusion.
With respect to the second and third questions, the ECJ firstly considered Art. 2.2 of the Directive, which provides:
“Each of the Member States shall have the right to provide that the Directive shall not apply to those persons whose activities as commercial agents are considered secondary by the law of that Member State”
However, except for the case mentioned above (which the ECJ considered not applicable to the case at issue, i.e. Belgian law), persons performing activities as commercial agents must be regarded as falling within the scope of the Directive, even if those activities are combined with activities of another kind.
The Court confirmed its view, by referring to the purpose of the Directive, i.e. to protect commercial agents in the relationship with their principal, arguing that:
“The contrary interpretation would allow the principal to circumvent the mandatory provisions of Directive 86/653, in particular, those relating to its obligations with regard to the commercial agent, by providing in the contract for tasks other than those related to the activities of commercial agents”
However, the ECJ, also in this respect, stated that such conclusion can be confirmed only to the extent that the independence of the agent is not affected, aspect that is for the competent State Court to be evaluated “taking account of all of the circumstances of the case, such as the nature of the tasks performed, the manner in which they are carried out, the proportion those tasks represent with regard to the overall activities of the person concerned, the method of calculating the remuneration, or the reality of the financial risk incurred”.
In conclusion, this judgment is a useful clarification for domestic Courts with regard to the performance of ancillary activities (see for example the typical cases of supervision activities of other agents, activities in support to the principal and to customers e.g. merchandising, etc..), as well as reaffirming the "borders" with employment contracts, which remains subject to a factual assessment of the national Court, with respect to the independence and autonomy of the agent in carrying out his/her activity, irrespective of the circumstance that such activity is performed in an itinerant or non-itinerant manner.
The consequent issue - which is obviously not dealt with by the Court of Justice and which it is up to the national Courts to deal with, with reference to each concrete case and to the specific applicable national rules - will also concern the coordination between the various activities that are or are not part of the typical activity of an agent and their remuneration; for example, will the remuneration of the accessory activities be considered in the calculation of the goodwill indemnity?
Text of the judgement: COURT OF JUSTICE Case C-452/17
Silvia Bortolotti, Secretary General IDI, IDI Country Experts for Italy