Commercial agents in the Netherlands retain the right to commission on agreements concluded after termination when these are primarily the result of their work during the agency and are finalized within a reasonable period according to the Dutch Article 7:431 paragraph 2 of the Dutch Civil Code.
Terminating an agency agreement in the Netherlands does not automatically end commission entitlements. Dutch legislation protects commercial agents by establishing commission rights that extend beyond the formal termination date of the agency. This protection acknowledges the reality that commercial processes often take months before deals are finalized.
What Determines Commission Rights Under Dutch Law After Termination?
The right to post-termination commission rests on Article 7:431 paragraph 2 Dutch Civil Code, which distinguishes two specific situations where the commercial agent receives commission on deals closed after the agency agreement ends.
Therefore, this commission entitlement applies when the agency agreement under Dutch law is primarily attributable to work the agent performed during the agency. Moreover, the deal must be finalized within a reasonable period after termination of the commercial agency agreement in the Netherlands. This timeframe varies per situation and depends on factors such as sales process complexity and customary lead times in the relevant industry.
Furthermore, the commercial agent has commission rights when either party received a customer order before termination. In this scenario, timing plays a crucial role: the order must be placed before the agency agreement formally ends, regardless of when the definitive contract is signed.
Practical Application in Amsterdam
A commercial agent in Amsterdam mediated medical equipment sales for a principal during two years. Following contract termination on December 31st, four orders were placed in January and February of the following year, each worth approximately €45,000. The District Court of Amsterdam ruled that the agent was entitled to full commission on three of these orders because the sales process was lengthy and complex, and the agent had performed all preparatory work.
How Long Does the Reasonable Period for Commission Under Dutch Law Last?
The law deliberately uses “reasonable period” instead of a fixed timeframe, with courts assessing this duration based on concrete circumstances in each case.
Dutch courts often accept periods of four to six months for medical equipment or complex industrial products. Conversely, they typically apply shorter periods of eight to twelve weeks for standard consumer products.
Essential in this assessment is that judges examine the sales process duration customary during the agency. Namely, when deals normally required three months from initial contact to signing, a comparable post-termination period is considered reasonable. This approach ensures the commercial agent benefits from trajectories they genuinely initiated.
Proof of Preparatory Activities
The commercial agent bears the burden of proof for preparatory work. Specifically, they must demonstrate which activities contributed to the subsequent agreement. Documentation such as quotations, correspondence, visit reports and presentations significantly strengthen their position. Additionally, client testimonials regarding the agent’s role in decision-making processes provide valuable support.
Which Commission Is Due in the Netherlands When Double Mediation Occurs?
When both the former and new commercial agent contribute to closing a deal, the question arises who is entitled to commission according to Article 7:431 paragraph 3 Dutch Civil Code.
The starting point is that the new commercial agent has no commission claim if the former agent is entitled to commission under Article 7:431 paragraph 2 Dutch Civil Code. Therefore, the principal does not need to pay double commission in principle. However, courts may rule under certain circumstances that dividing commission between both agents is more equitable, considering their respective contributions.
Subsequently, judges weigh factors such as the extent to which each agent contributed to closing the deal. For example: the former agent prepared the trajectory and conducted initial discussions, while the new agent finalized negotiations and worked out contract details. In such cases, proportional division based on efforts may be reasonable.
How Does Contractual Deviation Relate to Legal Protection in Dutch Law?
Article 7:431 Dutch Civil Code is mandatory law, preventing parties from deviating to the commercial agent’s disadvantage from this commission arrangement. This protection prevents principals from undermining statutory entitlements through contractual constructions. Nevertheless, parties sometimes make agreements more favorable to the agent than legally required.
An agency agreement contained, for example, a clause granting the agent “full commission for orders placed within three months after termination”. Despite this, the court set aside this term when it led to legal dispute. The judge applied the statutory “reasonable period” and determined this at four months because the sales process was complex and lengthy. The contractual three-month term was declared void insofar as it placed the agent in a more disadvantageous position than the law provides.
Commission Calculation and Cost Deduction
Commission is calculated on the agreement’s gross value without deducting costs the commercial agent would normally incur. This approach recognizes that commission rewards mediation activities, independent of the agent’s cost structure. Nevertheless, client compensation calculations may consider expenses when a “substantial portion” of commission structurally covered costs.
What Happens Under Dutch Law With Minimal Use of the Commercial Agent?
Article 7:435 paragraph 1 Dutch Civil Code protects the commercial agent who fulfills obligations but whose services the principal does not use or uses considerably less than normally expected.
In this situation, the agent is entitled to remuneration even when few or no deals are closed. Judges determine this remuneration based on commission earned in previous periods while considering saved expenses. This regulation prevents principals from economically sidelining agents by simply not providing assignments anymore.
Do you need certainty about your commission entitlements after terminating an agency agreement? Specialized contract law lawyers in Amsterdam analyze your situation and advise on the legal strategy to safeguard your rights.
How Does Customer Compensation Work in the Netherlands Upon Termination?
Beyond commission rights, the commercial agent is entitled to customer compensation upon termination according to Article 7:442 Dutch Civil Code, which compensates the value created by bringing new customers or significantly expanding existing client relationships.
The calculation proceeds in three phases. First, one quantifies the benefits the principal derives from attracted customers. Next, one assesses whether adjustment based on equity is necessary, particularly considering the agent’s lost commission. Finally, one verifies whether the amount exceeds the statutory maximum: one year’s remuneration calculated on the average of the last five years.
Calculating Average Annual Remuneration
For determining customer compensation, gross remuneration is used without deducting structural business costs. For instance: a commercial agent earned €48,000, €52,000, €55,000, €51,000 and €59,000 over the past five years respectively. The average amounts to €53,000, which also forms the maximum for customer compensation. If the equity assessment indicates that €40,000 compensation is appropriate, the agent receives this amount.
What Role Does the Extraordinary Decree on Labor Relations Play in Dutch Law?
The BBA 1945 applies to agency agreements unless the commercial agent works for more than two principals, is assisted by more than two persons, or the agency constitutes only ancillary activity. Consequently, termination of certain agency agreements may require dismissal authorization from the Employee Insurance Agency (UWV). This obligation applies specifically when the agreement contains a personal work obligation.
Nevertheless, non-compliance with this dismissal authorization requirement leads to liability for damages under Article 7:439 paragraph 1 Dutch Civil Code. Damages amount in principle to commission over the remaining duration or notice period. Additionally, post-termination commission rights remain fully effective regardless of whether termination was lawful.
Urgent Cause as Exception
Termination for urgent cause constitutes an exception to damage liability. An urgent cause exists when circumstances justify immediate termination, such as serious breaches of duty or breach of trust. The burden of proof rests with the party invoking urgent cause. Moreover, this party must terminate the agreement shortly after discovering the facts.
How Do You Document Commission Claims Effectively in the Netherlands?
Systematic documentation of all client contacts, quotations and negotiation phases optimally protects your commission rights under Dutch law.
Utilize CRM systems that automatically record when you performed which activities for which prospect. Store correspondence, presentations and visit reports in structured manner with clear timestamps and client identification.
Furthermore, periodic reporting to the principal about ongoing trajectories helps demonstrate your preparatory work. These reports serve as objective evidence of your efforts and the status of potential deals at termination. Ensure each report is signed or confirmed via email by the principal.
What Are Common Dispute Points in the Netherlands in Practice?
Discussions regularly arise over whether deals are “primarily” attributable to the departed agent’s work, with principals sometimes claiming the new agent or internal sales staff performed the lion’s share of the work.
Therefore, detailed documentation is essential to objectively demonstrate your contribution. Approximately 70% of commission disputes involve disagreement about the agent’s actual contribution to finalized deals.
Furthermore, interpreting “reasonable period” leads to disputes. Principals often apply shorter timeframes than agents consider reasonable, especially for complex B2B trajectories. Case law provides guidance: the District Court of Amsterdam applied four months for medical equipment, while the Court of Appeal in The Hague found three months appropriate for standard ICT services.
Contact our law firm in Amsterdam for personal legal advice about your specific situation regarding termination of an agency agreement and commission disputes.
How Do You Prevent Commission Loss Under Dutch Law Upon Termination?
Anticipate termination by transparently communicating about ongoing trajectories and their status. Document in writing which prospects are in which sales process phase at termination. Specify per client which concrete steps you took and what the expected lead time to deal closure is.
Additionally, consider actively continuing work on ongoing trajectories during the notice period and documenting this. Although you no longer perform new work after termination, continued commitment during the notice period demonstrates your dedication to ongoing deals. This strengthens your position that deals closed shortly after termination are indeed the result of your preparatory work.
Amicable Settlement Versus Legal Proceedings
In approximately 65% of commission disputes, parties reach amicable settlement before litigation becomes necessary. This approach saves time, costs and reputational damage. Mediation by a specialized mediator often leads to pragmatic solutions where both parties make concessions. For example: the principal acknowledges commission rights over selected deals while the agent waives claims on doubtful cases.
Nevertheless, judicial intervention sometimes remains unavoidable when principals contest every commission claim or refuse to negotiate. Proceedings at the District Court of Amsterdam typically take six to twelve months, including court fees starting at €677 for claims up to €25,000. Higher claims incur higher court fees, ranging up to €3,772 for amounts exceeding €200,000.
What Preventive Measures Protect Your Rights in the Netherlands?
When commencing the agency, establish clear agreements about commission calculation, deal attribution and documentation obligations to protect your interests under Dutch law.
Define which criteria determine whether a deal is attributed to your mediation. Specify procedures for reporting prospects and ongoing trajectories to the principal.
Moreover, maintaining a periodic overview of attracted customers and their value to the principal is advisable. This “client portfolio” supports not only post-termination commission claims but also potential customer compensation entitlements. Update this overview at least semi-annually and share it with the principal for explicit or implicit confirmation.
The statutory protection of commercial agents in the Netherlands ranks among the strongest in Europe. Dutch courts consistently interpret Article 7:431 Dutch Civil Code in the agent’s favor when doubt exists about commission rights. This protection recognizes the dependent position of commercial agents and the investments they make in client relationships from which the principal continues to profit.
