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Increasing numbers of individuals are working in the ‘gig economy’ engaging with business to provide their services on an ad hoc basis. There is an attraction for people seeking to take control of their own careers through choosing their own working hours coupled with the eagerness of business to avoid the perceived burdens associated with a traditional employment relationships.

The tensions and contradictions inherent in the gig economy have recently been driving litigation as well as headlines and have prompted people like the boss of a takeaway delivery service, William Shu, to opine that UK employment law needs updating and that “there are laws drawn up years ago that may be less relevant for today’s economy”.

There is however another relatively long established type of relationship between businesses and individuals which, while not amounting to employment’ brings with it significant obligations for the business. which they may not be fully aware of. If an individual acts as an agent for a business i.e. where they act as an intermediary involved in the making of a contract between their “Principal” and the Principal’s customer then they may benefit from the protection in the Commercial Agents (Council Directive) Regulations 1993 (the “Regulations”).

The Regulations, which implement the EU Commercial Agents Directive in the UK, aim to protect commercial agents from unfair treatment primarily in relation to remuneration/commission, notice of termination and termination of the agreement.

A commercial agent may be contracted to buy or sell products on behalf of the principal company. Typically, this would involve a manufacturing company engaging the agent to sell its product (e.g. food, technology, clothing, spectacles etc.) to third party retailers. Alternatively the agent may be engaged to purchase goods on behalf of a principal.

The Regulations only apply to the provision of goods - not services - although the definition of “goods” is developing. The impact and interpretation of the Regulations remains a hot topic of dispute in courts across the EU and notwithstanding BREXIT the Regulations are not going away anytime soon.

It is clear that the courts are attempting to move with modern times and provide increased protection for commercial agents. A business seeking to put in place such an arrangement should consider their potential obligations under the Regulations and contemplate alternative options.

For a more comprehensive guide to the Commercial Agents (Council Directive) Regulations 1993 click here to download a detailed note.

For further information and advice on commercial agency please contact a member of the Stronachs’ Employment Team.

Eric Gilligan, Partner


Chambers Leading Firm 2019

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