The EU Commercial Agents Directive (86/653/EEC) protects independent commercial agents across the EU. It sets minimum rights for termination notice, compensation for loss of goodwill, and prevents unfair contract terms. But many principals (companies hiring agents) use contracts that try to bypass these protections or offer minimal compensation. If you're an agent in the EU, you need to know what the law guarantees you, regardless of what the contract says.
What is a Commercial Agents Directive?
A commercial agent is a self-employed intermediary who negotiates or concludes sales/purchases on behalf of a principal. The Directive applies to agents in all EU member states and the UK (retained in UK law). It requires: written contracts, fair and equitable treatment, proper notice of termination (minimum 1 month, extendable to 3 months by agreement), compensation for lost goodwill, and prohibition of non-compete clauses longer than 2 years.
Red flags to watch for
The Directive requires minimum notice: 1 month initially, extendable to 3 months if agreed. Any shorter period is non-compliant.
The Directive requires either compensation or indemnity for goodwill built up during the agency. Omitting this is non-compliant; you're entitled to it by law.
Post-termination non-compete must not exceed 2 years and must be in writing. Anything longer is unenforceable.
The principal must give proper notice (1–3 months). Immediate termination may be justified only for serious breach.
The Directive requires a written contract with at least: name/address of parties, goods/services covered, sales territory, commission rates, contract duration.
While commission structures can vary, unilateral changes without notice or fair procedure violate the duty of fair dealing.
Your legal rights
The Commercial Agents Directive (86/653/EEC) applies across all EU member states and the UK (via retained EU law). It requires: a written contract, minimum 1-month notice of termination (3 months if agreed), compensation for lost goodwill (at least one month's average commission over previous 5 years), and protection against non-compete clauses exceeding 2 years. Member states cannot provide less protection (they can provide more). Courts have consistently held that Directive rights are mandatory and cannot be waived by contract.
Questions to ask before you sign
- 1What is the notice period for termination, and does it meet the 1–3 month requirement?
- 2How is compensation for loss of goodwill calculated, and what is my entitlement if you terminate?
- 3What is the geographic territory I'm authorised to sell in?
- 4How are commissions calculated, and can they be changed unilaterally?
- 5Is there a post-termination non-compete clause? If so, how long does it last?
- 6What are the grounds for termination, and must you provide notice before terminating for cause?
- 7Does the contract clearly outline my duties and your obligations to me?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.