Brexit: Possible Implications for Commercial Agents

The British government recently announced its plans to scrap all EU financial regulations by the end of 2023. Despite the profound impact that will have on the UK financial sector, this current government appears determined to have its “Brexit bonfire”. The UK ceased to be part of the EU on 1 January 2021. However, the EU regulations implemented pre-Brexit remained part of UK law. But since 1 January, the UK is no longer required to have any EU regulations.

Given statements made by the former Minister for Brexit Opportunities, Jacob Rees-Mogg, the bonfire is likely to spread to other EU regulations, which include the Commercial Agents (Council Directive) Regulations 1993 (the Commercial Agents Regulations).

If the Commercial Agents Regulations are scrapped, it is overwhelmingly likely that agents will lose out on the right to claim compensation from their principals on termination of the agency. Moreover, the author doubts any new UK-made legislation dealing with commercial agents’ activities in the UK (assuming there would be any such legislation) would include the right to claim compensation. Therefore, any right to claim compensation as a result of termination would have to be written into a written contract between the agent and principal, which would be a matter for commercial negotiation.

The point here is that if the Commercial Agents Regulations are scrapped, principals will not be obliged to pay compensation on termination. The implications are that agents, especially those with high-earning agencies, could be terminated without any ramifications. That unfairness is precisely what the Commercial Agents Regulations were designed to remedy, and agents have enjoyed that protection since 1993.