Sales representatives or employees - an important question for companies. Many companies also rely on “external sales intermediaries” when selling their products, especially commercial agents. After all, sales representatives have proven themselves in product marketing in many branches of industry, since they work on the basis of commissions and, in some cases, bring their own customer base to the sales department.
Commercial agents are particularly protected by European and German law. Many court decisions therefore repeatedly deal with commercial agency law and the question of whether someone is a commercial agent or an employee. Read below for the latest legal developments on the question of “sales representative or employee”.
commercial agent or broker
In practice, however, the distinction between commercial agent and commercial broker is often more difficult when it comes to the question of commercial agent or employee. Commercial agents and commercial brokers act in the name and for the account of others. Both receive a commission for a closed deal, but neither of them is involved in the actual deal. This is only between the company and the customer. But: A commercial representative is only someone who, as a self-employed person, constantly initiates and mediates sales transactions with customers for another company.
The commercial agent "must" and the commercial broker "may" constantly try to broker business. The commercial broker is not constantly obliged to bring about a transaction, but is usually active on a subject-related basis. According to a new decision by the Düsseldorf Higher Regional Court (judgment of May 27, 2016, Az: I-16 U 187/14), the written text of the contract or the parties’ own opinions are less important than the overall picture of how the cooperation actually works is lived. It is cheaper for a company to use a commercial agent because the commercial agent has no right to a book extract and no right to compensation.
Commercial agent or employee?
One of the most debated issues in agency law is whether a company has agents or employees. As a rule, this question becomes important when both sides have fallen out. The qualification as a commercial agent or employee has considerable relevance for many legal issues.
Labor Law or HGB
Commercial agents are not employees and therefore labor law does not apply to them. Rather, the relevant provisions of commercial law from the Commercial Code, HGB for short, are applied. The rights and obligations of the commercial agent and the entrepreneur are precisely regulated in the HGB, such as claims to commission for transactions or reimbursement of expenses, regulations for contract termination and compensation payments as well as non-compete agreements after the end of the contract.
The employment relationship between the company and the employee, on the other hand, is governed by labor law. It includes laws, ordinances and other provisions on non-self-employed, dependent work. In contrast to the HGB, the focus here is on employee protection, such as employment contracts, working hours, protection against dismissal or collective agreements. In labor law, a distinction is made between individual labor law, which regulates the employment relationship between employer and employee, and collective labor law, which regulates the employment relationship between employers and the employee representative bodies (e.g. works council, staff council or trade union).
Different demands follow from this
From a certain number of employees in the company, the employee has the protection of the Dismissal Protection Act. He can therefore only be dismissed for an important reason, while the commercial agent only benefits from the duration of the commercial agency relationship's staggered notice periods. A reason for termination is not required. After the end of the cooperation, the commercial agent is entitled to a compensation claim under the German Commercial Code (HGB) - unless the entrepreneur has given notice for an important reason - while the employee can "only" demand a severance payment. The commercial agent has far-reaching information rights that are sometimes “painful” for the MI entrepreneur, in particular to the issuing of book extracts, while the employee is not entitled to this.
The distinction between commercial agent and employee is usually tied to “self-employment”. Neither the wording chosen in the contract nor the parties' own assessments are important. The decisive factor is always whether the required (non-)independence as a commercial agent or employee results from the implementation of the specific contract and thus from the overall picture of the cooperation. The employee is integrated into the company's operations and is subject to comprehensive instructions from the company as the employer with regard to time, duration, place and type of work execution. The self-employment of the commercial agent, on the other hand, is characterized by entrepreneurial risk, the operation of one's own business premises and the freedom to freely dispose of working hours and place of work. The decisive factor for the question of commercial agent or employee is whether one or the other characteristics predominate in the activity.
The Hamm Regional Labor Court, for example, found in June 2017 (judgment of June 7, 2017, Az: 14 Sa 936/15) that a self-employed commercial agent can be an employee if he has to be available to the entrepreneur without restrictions to make appointments perceive that the company assigns him. He can then no longer freely determine his working hours. The so-called time sovereignty is therefore a very important criterion when distinguishing between commercial agents and employees.
It can also be problematic if the company requires its sales representatives to work full-time for the company. They can then be so-called “single-company representatives”. If this is equivalent to the contractual ban on working for other companies, or if this is not possible for the commercial agent due to the type and scope of the activity required of him, according to the recent case law of the Federal Court of Justice (decision of October 21, 2015, Az: VII Eg 8/15) there is also an employment relationship.
Especially in distribution commercial agents play an important role. First of all, they are cheaper for the company, because as a rule, they only receive a commission on the turnover if they conclude transactions and sell products or services to the customer. The case law will accordingly continue to deal with questions of commercial agency law. Commercial agency law primarily serves to protect the commercial agent, so that in many cases the entrepreneur cannot deviate from the statutory provisions. How little contractual regulations are worth can be seen in particular when distinguishing between commercial agents and employees. Here the overall picture of the independence of the activity is decisive, here in particular the time sovereignty.