The agency contract and the employment relationship: distinguishing criteria and evaluation parameters.
When speaking of an agency, it is safe to say that this figure should be included in the category of the self-employed.
In fact, although in the definition of commercial agent formulated in Article 1746 of the Civil Code there is no reference to the independence of the agent's work activity, European legislation 86/653/EEC (on which the Italian model is based) had made specific reference to the agent as a worker independenthowever obliged to "adhere to the reasonable instructions given by the principal."
Already from a first reading of the regulations it is clear that the agent, although independent and carrying out its activities independently, must nevertheless comply with the provisions of the principal, who is in charge of deciding the company's commercial policies. This relationship of interdependence, which is very delicate, is more clearly regulated by the AEC Commerce 2009 and Industry 2014, which in Art. 1 para. 3 provide as follows:
"[The agent [is] obliged to direct the principal's distribution policies in accordance with the instructions provided by the principal. The principal decides in broad strokes what the agent is to do, without being able to interfere in the manner in which the agent intends to achieve the required result. "[1]
From the combined analysis of the above-mentioned rules, it is clear that:
- On the one hand, the principal may not impose obligations on the agent that are incompatible with its autonomy;
- on the other hand, the agent, although operating under full autonomy, is nevertheless obliged to follow in broad strokes the directives of the principal.
If, on the other hand, the relationship has characteristics similar to those of a subordinate job, it can be qualified as an employment relationship, regardless of the nomen iuris with which the parties have qualified the relationship.[2] According to a constant orientation of the Supreme Court, the distinguishing element between the two figures is characterised by the:
"subordination of the worker to the organisational, managerial and disciplinary power of the employer."[3]
It follows, therefore, that the cooperation provided by the agent must be carried out under a regime of autonomy, whereas that provided by the employee is carried out under a regime of hierarchical subordination, with the employer organising the employee's energies[4] (cf. also The natural person agent, parasubordinate work and the employment rite). In fact, while on the one hand the agent must exclusively coordinate with the principal on the activities to be performed, the employee, pursuant to Art. 2094 of the Civil Code, performs work activities that are organisationally coordinated in time and space by the employer, who may from time to time intervene in the performance of the service by specifying the manner in which it is to be performed, to which the employee must necessarily conform (c.d. obligation of obedience).[5]
However, it is not always easy to delineate to which category a worker belongs, given that both the figures of both the employee and the commercial agent are characterised by the stability of collaboration[6] (precisely this element, i.e. 'stability', distinguishes the agent from the business procurer, on this point see Art. What is the difference between an agency contract and a business intermediary?).
This complexity is further exacerbated in certain sectors where, due to the way the activity is carried out, the agent is de facto required to strictly follow the directives and timetables imposed not so much by the principal, but rather the market in which it operatesFor example, consider the figure of an agent promoting sales at a car dealership, who, in fact, is bound to promote sales in a certain display area and during the shop's opening hours.[7]
Since there is no single, 'decisive' element that makes it possible to understand whether a given relationship is to be qualified as agency or employment, it will have to be considering the different typical elements in the individual case of subordination (such as, for example, lack of decision-making autonomy, absence of risk, inclusion in the organisation of the company, obligation to comply with fixed timetables and itineraries fixed by the principal), bearing in mind that none of these alone allows the relationship to be considered subordinate, but rather an overall assessment of all of them must be carried out.[8] On this point, the Supreme Court ruled that:
"the agency relationship, the autonomous nature of which cannot be questioned, is not incompatible with the subjection of the staff member's work to directives and instructions as well as more or less intense and penetrating administrative and technical controls in relation to the nature of the business and the interest of the principalnor with the agent's obligation to visit and instruct other employees, nor with the principal's obligation to reimburse certain expenses incurred by the agent, nor, finally, with the principal's obligation to report daily to the principal."[9]
To give a practical slant to this article, however, it can be reasonably assumed that, by way of example, the principal may not:[10]
- impose the daily list of customers to visit (but he may ask to visit certain customers or categories of customers he cares about);
- programming the itineraries which the agent must follow (but may require the agent to organise the visits in such a way as to cover its area of competence adequately);
- decide theinternal organisation of the agency (but to demand certain standard quality of personnel, suitability of premises and number of employees according to the agent's promotional activity);
- impose detailed statements on the activities carried out by the agent (but ask report on market trends).[11]
A final issue, of great practical relevance, is that of the compatibility of the fixed remunerationwith the typical autonomy of the contractual relationship under consideration.
Although the European directive does not exclude the reconciliation of this method of remuneration with the figure of the agent, Italian jurisprudence (criticised by part of the doctrine[12]) declared itself against this thesis[13]In such a case, the agent, who would only receive a fixed remuneration, regardless of the results he or she brings, would not assume any entrepreneurial risk, a characteristic that distinguishes this figure.
In any case, case law considers forms of mixed remunerationunder which a fixed component is combined with a variable component. Such a solution whereby the agent is assured a "guaranteed minimum"is considered lawful and compatible with the agency employment relationship.[14]
_______________________
[1] BORTOLOTTI, The Commercial Agency Contract, Vol. I, p. 86, 2007, CEDAM.
[2] Cass. Civ. 2004, no. 9060.
[3] Cass. Civ. 1990 no. 2680.
[4] BALDI - VENEZIA, In contratto di agenzia, p. 33, Giuffrè Editore.
[5] PERINA - BELLIGOLI, The Agency Relationship, p. 27, Giappichelli Editore
[6] Trib. Milan 8 March 20210, in Agents and Sales Representatives 2012, No 3 p. 31. The Court of Milan states on this point that "the agent's obligation consists in visiting, on a stable and continuous basis, all possible customers and making a predetermined contractual proposal (predetermined by the principal, as to its essential aspects) to the principal.
[7] On this point see also Cass. Civ. 2009 no. 9696. In the present case, the S.C. held that the territorial court had correctly ruled out the existence of a relationship of subordination since, on the one hand, since the person concerned carried out the activity of propagandist or promoter for the sale of educational equipment for schools and universities his working hours necessarily had to coincide with the opening hours of those institutions and did not constitute a decisive indication, while, on the other hand, he had repeatedly qualified himself, in the course of the relationship, as an agent and not as an employee, his contract had been concluded in order to replace another previous agent and he was under no obligation to justify his absences.
[8] BORTOLOTTI, Distribution Contracts, p. 129, 2016, Wolters Kluwer.
[9] Cass. Civ., 1990 no. 2680, Cass. Civ. 2001, no. 11264. In this judgment, the Supreme Court therefore held that "an agency relationship had existed between the parties, irrespective of the length of time over which it had lasted, in that the agent, although having to give an account in a daily report of the work performed and although having to follow an itinerary predetermined by the principal, did not lose the agent's autonomy with the possibility of choosing customers within the area assigned to him and with the possibility of adopting the working methods considered most suitable."
[10] BORTOLOTTI, The Commercial Agency Contract, Vol. I, p. 88, 2007, CEDAM.
[11] On this point it is important to note that the AEC Commerce and Industry, which provide in Art. 1 para. 3 that the agent is "obliged to keep the parent company constantly informed of the situation on the market in which it operates, it is not, however, obliged to report at predetermined intervals on the performance of its activities'. It is therefore important to emphasise that the principal may not demand from the agent periodical reports on the performance of the agent's activities (e.g. reports on visits made), but may instead ask him to be informed, even periodically, of market conditions and relevant data (names of customers visited and results of visits).
[12] PERINA - BELLIGOLI, The Agency Relationship, p. 27, Giappichelli Editore; Saracini-Toffoletto, p. 327 ff.
[13] Cass. Civ. 1986 no. 3507; Cass. Civ. 1991 no. 10588; Cass. Civ. 2012 no. 12776. The latter judgment went so far as to admit that "in the agency relationship the parties may provide for a form of remuneration for the agent's services other than a commission determined as a percentage of the amount of business concluded (such as a fixed sum for each contract concluded), but without going so far as to acknowledge that remuneration in the form of a commission can be entirely replaced by a fixed remuneration.
[14] See on this point Cass. Civ. 1975 no. 1346; Cass. Civ. 1980 no. 34; Trib. Di Milano 9 September 2011.
The natural person agent, parasubordinate work and the employment rite.
Law No. 533/73 introduced into the Italian procedural system the so-called "rito lavoro", a procedure characterised by the principles of orality and immediacy. Point 3 of paragraph 1 of Article 409 of the Code of Civil Procedure, introduced by this Law expressly provides that the following are also subject to the labour procedure
"agency and commercial representation relationships [...] which take the form of continuous and coordinated work, predominantly personal even if not of a subordinate nature."
Therefore, disputes relating to agency and representation relationships are also subject to the labour court if the work performance is characterised by the continuity, from coordination and the prevailing personality (cf. also The agency contract and the employment relationship: distinguishing criteria and evaluation parameters).
A third figure, namely that of 'parasubordinate' work, has thus arisen alongside the already existing categories of self-employed and subordinate workers. It was first elaborated by doctrine, and then transposed by case law itself,[1] to respond to a real need to define those self-employed relationships in which, in fact, the worker is in a position of dependence towards the principal that is less strong than that of a subordinate worker, but certainly much more binding than self-employed relationships. In this way, a category of subjects has been enucleated that is deemed worthy of even stronger protection, which brings them closer in this respect to subordinate workers.
The question arises as to whether only commercial agents acting as natural persons are subject to labour proceedings, or also agents who, although they operate in the form of corporations, have a structure such that the personal element of the service prevails (e.g. single-member companies). According to the most recent case law of the Court of Cassation, they are deemed to be subject to the employment procedure, only disputes involving agents acting as natural personsexcluding all cases of an agent operating in the form of a company, be it a partnership or a corporation, regular or irregular.[2] In a recent ruling, the Supreme Court stated that:[3]
"where the agent is a company or avails itself of an autonomous entrepreneurial structure, the personal character of the service is lost, with the consequence that the relationship can no longer be brought under the provision of Article 409 of the Code of Civil Procedure and, therefore, to the employment rite, since, where the capacity of agent is assumed by a corporation or partnership, the company, even if lacking legal personality, still represents an autonomous centre of legal relations that stands between the partner and the principal".
Jurisprudence also holds that the natural person agent who performs the its own activity using its own personnel, provided that in the relationship the organisational aspect of the agent does not prevail over that of personal performance:[4] Although the personality of the service must be prevalent, it need not be exclusive. On the other hand, parasubordination must be excluded if the activity is carried out according to entrepreneurial criteria such that the agent merely coordinates and directs his collaborators, without performing any promotional activity.[5] (cf. also What is the difference between an agency contract and a business intermediary?)
Parasubordinate workers are subject to the same legal treatment as employees not only with regard to the application of the labour law, but also to the right to the revaluation of labour claims[6] and the substantive legal institution of the invalidity of waivers and settlements relating to the employee's unavailable rights pursuant to Article 2113 of the Civil Code, which we will discuss in the following section.
_______________________
[1] Cass. civ. Sec. labor, 1998, no. 4580.
[2] Civil cassation 2012, no. 2158, By far the prevailing case law holds, however, that when the agent is a corporation or makes use of an autonomous entrepreneurial structure, the personal character of the service ceases to exist and the relationship cannot be brought within the scope of Article 409, given that if the capacity of agent is assumed by a corporation or partnership, the corporation, even if lacking legal personality, still constitutes an autonomous centre of legal relations that stands between the shareholder and the principal; Civil cassation no. 2509/1997; Civil cassation no. 9547/2001; Civil cassation no. 14813/2005; Civil cassation no. 6351/2006; Civil cassation no. 15535/2011; App. Florence, 11/04/2007 "Disputes between the agent and the principal fall within the jurisdiction of the labour court if the activity performed has the characteristics of parasubordination, i.e. where the agent performs the activity predominantly with personal labour. This requirement is lacking when the agent performs the activity in the form of a company, even a partnership or an irregular or de facto one, and also when the activity, although performed on an individual basis, is characterised by the prevalence of the organisational moment of the work of its employees and collaborators over the personal contribution.'; Bortolotti, Il contratto di agenzia commerciale, CEDAM, 2007.
[3] Cass. Civ. 2005 No. 14813.
[4] See also Cass. Civ. Sec. lavoro, 1998 No. 14454: which excluded the predominantly personal character of the agent ".that he had availed himself of two employees, a driver, a warehouseman, several vehicles and, above all, no less than six sub-agents, taking on the economic burden of the entire organisation also in terms of remuneration'.
[5] Cass. civ. Sec. II Ord., 22/03/2006, no. 6351.
[6] Art. 429, third paragraph, c.p.c. ".The court, when pronouncing a judgment sentencing the payment of sums of money in respect of employment claims, must determine, in addition to interest at the legal rate, the greater damage, if any, suffered by the employee as a result of the diminution in the value of his claim, sentencing him to pay the relevant sum with effect from the day on which the right accrued."