An age-old question?

by Paul Samuel
Director, Ashby Cohen Solicitors

The Press regularly
feature articles on baby
boomers and the
implications for society of
an ageing population.
Some of these baby
boomers will be long
standing agents and some
of these might want to
give up so as to spend
more time travelling, to be
with their grandchildren or
simply to be able to do
what they had always
wanted to do.

The Commercial Agents (Council Directive)
Regulations introduced in 1993 have made it easier
for an agent who is covered by them, to give up.
As is now well known, the Regulations introduced
the concept of a commercial agent being
compensated (either by way of compensation or an
indemnity) when the agency ends. The entitlement
does not apply where “the commercial agent has
himself terminated the agency contract, unless such
termination is justified…..on grounds of the age,
infirmity or illness of the commercial agent in
consequence of which he cannot reasonably be
required to continue his activity”.
This is the wording in the Regulations which enables
the agent to claim compensation on retirement. –
although the word retirement is not mentioned. So
far as the writer is aware there has not been any
binding court case which has ruled on the question
as to whether an agent is entitled to compensation
on retirement. .
The only reported case is a county court decision
called Abbott -v- Condici Limited and another,
given in 2004. Mr Abbott was in business as an
agent for some 43 years until he retired aged sixty
five and half in December 2000. He was the agent of
Condici for some 18 years and was the agent for the
second defendant Rinku for some 5 years (Rinku
being the “and another” referred to in the title of the
case). Mr Abbott accepted that he was fit and well
and could have continued physically to carry on his
agency.
Mr Abbott’s case was that on their correct
construction the Regulations protect a commercial
agent’s right to compensation when the reason for
his termination of the agency is that he wishes to
retire at an age generally recognised in the UK as
appropriate for him to stop working. Condici’s case
was that reaching a specified age cannot by itself
mean that the agent is entitled to compensation
when he retires simply because he has reached that
age.
Condici’s argument was that the agent’s entitlement
to compensation is only met if in consequence of
the commercial agent’s age he cannot reasonably
be required to continue his activity as a commercial
agent; and whether reaching any particular age
means that he cannot reasonably be required to
continue his activities depends upon the
circumstances of each case.
In other words, Mr Abbott was saying that having
passed the recognised retirement age of 65, he
could not reasonably be required to continue with
the agency and Condici was saying that it was not
enough to reach an age (whatever that age is), but
that there must also be circumstances so that the
agent cannot reasonably be required to continue
with the agency.
The County Court judge held that if the “age” was a
reasonable retirement age, the agent did not in
practice have to prove much more. Because Mr
Abbott was over the age of 65 when he retired, the
County Court judge found that the age of 65 was
“embedded as a retirement milestone” and that
having reached the age of 65, Mr Abbott could not
reasonably be required to continue his activities.
Thus on the preliminary point, the court decided
that Mr Abbott was entitled to be paid
compensation upon his retirement.

The case is only a county court decision and is not
binding. Although the position is by no means clear
(see below), it would probably be prudent for a
principal to assume that after the agent had reached
an age when he became entitled to a state pension,
the agent could retire and claim compensation
(notwithstanding that he was fit and able to carry
on). As Mr Abbott argued, it is difficult to see why an
agent should be compensated for the goodwill he
has generated for his principal where he has been
given lawful notice of termination or where he
becomes too ill to work or dies but not where he
reaches a generally recognised retirement age. On
the other hand, all of the other scenarios are outside
of the agent’s control whereas the decision to retire
is the agent’s alone.
Mr Abbott’s case was decided before the
compulsory retirement age was abolished so that it
would not be as easy nowadays for a judge to base a
finding simply on the agent having reached 65.
There has of course never been a compulsory
retirement age for somebody who is self employed.
In practice, people retire much earlier or much later
than 65 and they may have special circumstances
where it is reasonable for an agent to retire at a given
point e.g. to look after a partner / dependent who
has become ill. Condici’s argument that it was not
enough to reach an age (whatever that age is) but
that there must also be circumstances so that the
agent cannot reasonably be required to continue
with the agency, might still be available to a
principal.

Article written by Paul Samuel of Ashby Cohen
LLP, a leading law firm operating in all areas of
employment law, partnership law and in
matters arising out of the Commercial Agents
(Council Directive) Regulations 1993.

Ashby Cohen Solicitors Ltd
18 Hanover Street, London W1S 1YN
Tel: 0207 408 1338
Email: info@ashbycohen.co.uk
www.ashbycohen.co.uk

Disclaimer: This column does not contain legal advice and is for general guidance only. Agentbase, Ashby Cohen LLP and the writer accept no liability in connection with the general guidance given in this column. Please ensure that you obtain legal advice before acting in reliance upon anything in this article. For example, please be clear that the answers given in this column may not cover all possible angles, aspects, relevant considerations and/or points of law and so that all or any information which is given above needs in every instance to be referred for legal advice for clarification and
amplification, before being relied upon

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