Commercial agents are entitled to an indemnity following termination of the contractual relationship. As a prerequisite, however, their work for the company as a commercial agent must have been their main occupation.
If a commercial agency agreement is terminated, the outgoing commercial agent is normally entitled to an indemnity for the business contacts they established that remain in place after their departure. We at the commercial law firm MTR Rechtsanwälte note, however, that the right to an indemnity requires that the commercial agent have pursued this activity as their main occupation and that the work not merely represent a second job.
Whether a commercial agent’s activity represents their primary or secondary occupation does not simply come down to the commercial agency agreement. The most important criterium is whether the individual in question works predominantly as a commercial agent and derives the greater part of their income from this role. According to a ruling of the Oberlandesgericht (OLG) Düsseldorf, the Higher Regional Court of Düsseldorf, this is the decisive factor in evaluating whether activity as a commercial agent represents a person’s primary or secondary occupation (Az.: 16 U 61/16).
In the instant case, the parties were in disagreement over an indemnity payment to the commercial agent. The plaintiff had worked for many years for the defendant as a commercial agent brokering insurance. This was initially a second job before it became his main occupation. Extraordinary notice terminating the agreement was later issued after the plaintiff committed a breach of duty.
The defendant insurance company refused to pay an indemnity, claiming that the plaintiff’s work as an insurance agent was only a secondary occupation. This view was upheld by the OLG Düsseldorf.
The OLG first noted that the restrictions on someone working as a commercial agent as a second job only come into consideration if the relevant person is, in fact, only working for the company as an agent as a second job and not as their main occupation. This is to be determined on a case-by-case basis. It held that in the present case the plaintiff’s work for the company had at times indisputably been his main occupation and that he then received another contract implying second job status at his own request, but that the arrangements from the primary occupation continued to apply. Notwithstanding this, whether the plaintiff’s activity was still his main occupation was to be assessed on the basis of the so-called “Übergewichtstheorie” (predominance theory). The Court went on to clarify that the most important factors that distinguish a primary from a secondary occupation are time and remuneration, with greater importance attributed to time. However, the plaintiff was unable to provide evidence showing that this was his main occupation.
Lawyers with experience in the field of commercial law can advise companies and commercial agents.
For more informations: https://www.mtrlegal.com/en/legal-advice/commercial-law.html