Sales Agent Claims

Sales Agency Agreements - Unfair Termination

Worked As An Agent For A Company And Been Dismissed?

Engaging the services of a Sales Agent can be quite a cost effective means of many companies marketing their product's to their customer's and potential customer's without exposing the company to excessive overheads. One of the main benefit's to the company is that their sales costs are always going to be a given percentage of the actual sales made within the territory covered by the Agent and are not a fixed cost irrespective of sales performance as they would be in the case of a salaried employee. In this respect if an Agents area fails to perform there is very little commission to be paid to him where as if an employee fails to perform then they would still be entitled to their monthly salary.

To many "new" businesses the advantage of Agents is that they can achieve national coverage of their products with very little exposure to the overheads that employing Sales Representatives would bring and, hence, they can play a major part in helping companies develop their business.

So why would there ever be a case for a Sales Agent to want to bring a claim against a Principal whose product's they have taken orders for and helped them develop their business?

Quite simply, we find that many businesses fail to recognise the right's that have been granted to the Sales Agent in respect of The Commercial Agent's (Council Directive) Regulations 1993 and it's subsequent amendments. Many Agents find that the company for whom they have been taking orders for simply do not pay them for the work undertaken on their behalf, replace them with another Agent or dispose of all of their Agents and employ Sales Representatives because they believe this will save them money. In some instances these companies have a valid reason for not paying their Agent, however, in the bulk of the cases we see the Principal (Company) is just treating the Agent as a second class citizen knowing that if they treated their employee's in this manner they would simply leave.

Many Agents put up with the poor behaviour of the Principal for months on end and suffer in silence allowing the Principal to even increase the time period it takes them to pay their Agent's whilst the Agent unwittingly becomes a line of credit to the Principal that they probably were unable to obtain from their bank. Quite often we find that the performance of the Agent has been affected by the Principal's ability to reimburse the Agent for the work that the Agent has already performed but for which they have not been paid.

Amazingly, the Principal will try to use this as a reason for disposing of the Agent on the grounds of being a performance related issue and simply replace them with another Agent!

We have even heard of instances in respect of a company based in Kent where the company decided that once a customer achieved a turnover of £10,000 per annum they would become a "house account" and no further commission would be paid on that account...and then even had the cheek to inform the Agent that now that such customer had been removed from his client base he was no longer meeting his target's and wanted to dismiss him on performance related issues!

Ever wondered why the Agency for that fantastic product that everyone is talking about was so easy to obtain, yet, the company always struggles to engage Agents to work for any length of time for their company? The answer is they were probably not treating their Agents in accordance with the law and the Agents probably had some issues in getting paid!

If you have suffered from any of the above experiences from working for a Principal (Company) and you sold goods as opposed to a service on behalf of that company then we want to hear from you as you may well be able to make a claim against that company.

So What Can You Claim?

1. For every year or part year up to a maximum of 3 years you are entitled to receive a month's notice from your Principal.
2. You are also entitled to a sum of money in respect of any orders that you would have normally have been expected to obtain through such notice period or have already submitted.
3. You are entitled to commission on any orders which have been received by the Principal from customers within your agreed territory that have been invoiced for which you have not been paid.
4. You are also entitled to receive compensation or indemnity on termination of the Agency where the Principal does not have a valid reason for termination of such Agency. It is not unknown for this to equate to the sum of one year's earnings from the Principal calculated on the average annual remuneration of the Agent over the preceding five year's where such Agency has not been held for such time then it will be based on the period in question.
5. You can also claim compensation for any account on your territory which has been removed from your control and allocated to another Agent or has become a "House Account" thus depriving you of income.
6. Typically, where an Agent receives remuneration from the Principal of £12,000 per annum then based on the above example where the Agent has worked for the Principal for 3 years they would be able to pursue a claim against the Principal for a minimum of £18,000!