If the relationship is terminated, does it apply to the calculation of compensation for unfair dismissal?
Does the minimum wage apply to the special employment relationship of persons involved in commercial transactions? If the relationship is terminated, does it apply to the calculation of compensation for unfair dismissal?
We are going to analyse it in this article, which is not written by a machine but by a person.
What is a trade representative?
Special employment relationship with the company
A commercial representative is an entrepreneur or legal person who, independently and for remuneration, is responsible for promoting or concluding commercial contracts on behalf of another entrepreneur.
They are covered by the General Social Security Scheme and have a special employment relationship.
The clients recruited belong to the company, but in the event of termination of the employment relationship, severance pay must be added to the compensation for dismissal, provided that new clients have been brought in (or sales have increased with existing ones) and, once the contract has been terminated, the worker is obliged not to compete with the employer or not to provide services for another competing employer.
If the agent claims that the relationship between the two parties was an employment relationship (alleging that you controlled his business) and can prove it, the courts will uphold the claim.
Difference between a trade representative and a commercial agent
It differs from the commercial agent in that the latter is self-employed, assumes the risk of the operation and provides the service autonomously, while the commercial representative does so without assuming the risk and in a dependent, albeit flexible, manner.
Advantages of hiring a trade representative
Hiring a trade representative has several advantages, among others:
- Maintaining a portfolio of customers, increasing turnover and benefiting from the representative’s market expertise.
- Being able to provide a personalised service to customers to improve relationships, build loyalty and increase sales in the long term.
- You will be responsible for negotiating and closing contracts, allowing the entrepreneur to focus on other areas of the business.
Termination of the contract of a commercial representative
Customer indemnity
In the event of termination without cause of the special employment relationship of trade representatives, they shall be entitled to a special indemnity different from and in addition to that which they may be entitled to for unfair dismissal – in consideration of the increase in clientele which the company has achieved thanks to them – when certain circumstances are met:
- That the termination is not due to non-fulfilment of their obligations.
- That, once the relationship has ended, the worker is obliged not to compete with the employer or not to provide services for a competitor.
- That an increase in clientele is accredited (the annex to the contract in which the clients provided are listed must be taken into account).
- The amount of this compensation must be agreed between the parties (in case of disagreement, a judge must be consulted). The amount may not exceed the total amount of commissions for one year, calculated on the average of the commissions received during the last three years (or the duration of the employment relationship, if less than this period).
In order to calculate the client indemnity, the client lists established at the beginning and end of the relationship are compared, taking into account the increase in the volume of transactions.
Compensation for unfair dismissal and customer severance cannot be set off against each other, and the company must pay both amounts.
If there is no agreement between the parties
In the absence of agreement between the parties, the judge will determine the compensation for customers, which may not exceed the total amount of commissions for one year. This amount is calculated on the basis of the average amount of the total commissions received during the last three years (or the duration of the employment relationship, if less than this period).
Compensation for unfair dismissal of the trade representative
As regards possible compensation for unfair dismissal, these are set in accordance with the provisions of the Workers’ Statute (Estatuto de los Trabajadores, ET). Thus, the monthly salary is calculated on the basis of the average income obtained during the two years prior to the dismissal or termination of the contract (or a shorter period, if applicable).
Within the scope of this special employment relationship, the basic employment rights and duties recognised in the Workers’ Statute are applicable.
Remember that the compensation for unfair dismissal is 33 days’ salary per year worked, with a limit of 24 monthly payments.
Does the minimum wage apply to compensation for unfair dismissal?
The courts have recently analysed whether the minimum interprofessional wage (SMI) should be applied in the special employment relationship of persons involved in commercial transactions and, specifically, in the case of a dismissal of a worker in the category of sales representative, with a full working day and whose average salary (received during the months he has provided services) is equivalent to 32.99 euros per day (average between the fixed salary and the commissions paid).
The remuneration agreed by the parties consists of commission on sales, fixed salary and expense allowance.
The SMI for the year 2024 is 15,876 euros per year (equivalent to 37.80 euros per day).
Trade representatives have their own specific regulation. As for what is not regulated, the basic labour rights and duties recognised in the ET are applicable; among them, the right of workers to the timely receipt of the agreed or “legally established” remuneration.
The minimum wage is to be taken into account as a standard wage when calculating the severance pay of a sales representative, if his or her salary does not reach the minimum wage.
Calculation of compensation for unfair dismissal
The specific regulations do establish that, in relation to possible compensation for unfair dismissal or similar cases, these will be set in accordance with the provisions of the ET.
Thus, the monthly salary is calculated on the basis of the average income obtained in the two years prior to the dismissal or termination of the contract (or a shorter period, if applicable).
Therefore, it is logical that the amount of the SMI should be respected for the calculation of the compensation for unfair dismissal, and this has been confirmed by the courts.
Therefore, if the salary of a sales representative does not reach the minimum wage, it would be the SMI that should be taken into account as the regulatory salary for the calculation of the severance pay (not for the customer severance pay).
In short
Irrespective of the salary received by the person providing services in a special employment relationship, the calculation of severance pay in the event of dismissal must take into account a standard wage equivalent to the minimum wage (on an annual basis) that must be applied according to the regulations published each year.
What if the employment relationship is common?
If a judge were to declare that the employment relationship between the two parties was common (e.g. if you were a simple salesman), you would be entitled to have the customer indemnity returned to you, but you cannot directly offset the amounts of the indemnities, as they are of a different nature and compensate different damages. In these cases:
- Apply to the court for severance pay and request compensation.
- If the court rejects the compensation, you will have to claim the refund of the customer severance pay in court, claiming that you should not have paid it.
