How is the contract termination indemnity calculated according to the 2014 Industry AEC?

Article 10 of the 2014 Industry AEC (see also , splits the severance pay into three components:

• termination indemnity, set aside by the principal in the ENASARCO fund (FIRR) (Chapter I);
• supplementary customer indemnity paid to the agent or representative even in the absence of an increase in customers and/or turnover (Chapter II);
• merit-based allowance, linked to an increase in customers and/or turnover (Chapter III).

Para. (3) of Article 10 also provides that the indemnity is to be calculated on all sums, however denominated, received by the agent in the course of the relationship, as well as on sums in respect of which at the time of termination of the relationship the right to payment in favour of the agent or agent has arisen, even if they have not been paid in whole or in part.

This implies that these allowances (on this subject see also calculation of indemnity pursuant to art. 1751 of the civil code., calculation of former AEC 2009 allowances, calculation of ex ANA allowances 2003) should also be calculated taking into account:

• non-commissionable remuneration, such as reimbursement of expenses and/or ancillary activities;
• amounts accrued but not yet received and/or paid to the agent at the date of termination.

(cf. also Collective bargaining. Origins, value and enforceability. And if a contractor is a foreigner, do they apply or not?)

I. FIRR

The FIRR is set aside at ENASARCO by the principal and, upon termination of the relationship, is due to the agent regardless of any increase in clientele and/or business. On the other hand, it is not paid in the event of termination of the relationship at the initiative of the principal, justified by the following conduct on the part of the agent: undue withholding of sums due to the principal, unfair competition, violation of the exclusivity obligation for a single firm.

The obligation to set aside the FIRR only exists if the AEC apply to the relationship. The AEC are only applicable to the contract if both parties (principal and agent) are members of the contracting trade unions, or, otherwise, the parties have expressly referred to the AEC in the contract, or have provided for their implicit application in the course of the relationship (e.g., where the principal has provided for a spontaneous, constant and uniform application of certain provisions of the AEC).[1]  This implies that in the event of non-application of the AEC, the principal is not required to set aside the FIRR, but only to pay social security contributions to Enasarco.[2] (on this point cf. the social security obligation of the Italian agent and the foreign principal).

It is important to note that case law[3] and doctrine,[4] unequivocally hold that the claim for payment of the FIRR must be made against Enasarco and not against the principal, except for any sums not set aside by the latter.

This allowance is calculated annually as follows:

ONE-MAN AGENT

• 4% on the portion of commissions up to € 12,400 per year
• 2% on the portion of commissions between € 12,400 p.a. and € 18,600 p.a.
• 1% on the portion of commissions exceeding € 18,600 per year

MULTI-FIRM AGENT

• 4% on the portion of commissions up to € 6,200 per annum
• 2% on the portion of commissions between € 6,200 p.a. and € 9,300 p.a.
• 1% on the portion of commissions exceeding € 9,300 per year

II. SUPPLEMENTARY ALLOWANCE

According to majority case law, AECs represent a guaranteed minimum treatment for the agent,[5] such indemnity will be paid to the agent upon termination of the relationship and will be due to the agent regardless of proof by the agent that it has developed the principal's business and/or clientele, as is the case with the civil law indemnity under Art. 1751 of the Civil Code (on this point see severance pay in agency contracts).

It will be recognised at the following rates:

This indemnity shall be due in all cases where the termination of the relationship is not due to a fact attributable to the agent (whether in the case of a fixed term or open term contract). No facts attributable to the agent shall be deemed to be facts:

• resignation due to established serious breach of duty by the principal,
• resignation as a result of permanent and total disability,
• resignation due to infirmity and/or illness that does not permit continuation of the relationship,
• resignation following the attainment of the ENASARCO old-age or early old-age pension,
• resignation following the attainment of an old age or early old age pension INPS.

III. MERITOCRATIC ALLOWANCE

The AEC Industry 2014 provides for a rather structured calculation to quantify the meritocratic allowance, which will only be paid to the agent if it is higher than the sum of the two allowances analysed above (FIRR + supplementary).

The calculation of the meritocratic allowance is as follows:

• Determination of theincrease in customersconsisting of the difference between the commissions received by the agent at the beginning and at the end of the relationship, bearing in mind that the prognosis period will vary depending on the agent's status as a sole or multiple agent and the duration of the relationship, according to the following table:

• The initial figure is made homogeneous with the final figure by applying to it the Istat revaluation coefficient for labour credits.

• The rate of migration of customers according to the following table:

• For the first year of the prognosis period, the aforementioned rate of migration is subtracted from the value of the increment referred to in point 1. For the subsequent years of the prognosis period, the same migration rate is subtracted from the value determined for the previous year of the prognosis period. The results thus obtained are added together.

• The amount obtained is reduced on a lump-sum basis by a variable percentage equal to:
  • To 10% for contracts of 5 years or less;
  • To 15% for contracts with a duration of more than 5 years and less than 10 years
  • At 20% for agency contracts exceeding 10 years.

• Compare the meritocratic indemnity calculated according to the preceding points with the maximum value of the indemnity provided for in the third paragraph of Art. 1751 of the Civil Code.

• The termination indemnity and the customer indemnity are deducted from the meritocratic indemnity obtained.

[1] See Bortolotti, Distribution Contracts, 2016, Wolter Kluwer, p. 87 ff.

[2] Trib. Rome 14.1.2010.

[3] Trib. Bari 2.5.2012.

[4] Bortolotti, Distribution Contracts, 2016, Wolter Kluwer, p. 365 ff.

[5] See on this point Cass. Civ. 2014 no. 7567. However, it should be noted that the European Court of Justice, in a judgment of 23 March 2006, challenged the legitimacy of the supplementary client indemnity as provided for by the AEC, which allows the agent to receive a termination indemnity in any event, even if the agent has not actually developed the principal's clientele and the latter benefits from it even after the termination of the relationship; in line with this orientation there is a minority direction of the case law on the merits, which has held the AEC inapplicable to our system and has therefore not recognised the agent's entitlement to the rules set out therein as a guaranteed minimum (Tribunale Treviso 29 May 2008. Tribunale Treviso 8 June 2008; Tribunale di Roma 11 July 2008).