Written by Steve Sidkin
11 April 02

Over the last eight years, many principals have realised that they cannot afford to ignore the provisions of the Commercial Agents (Council Directive) Regulations 1993 (as amended) when dealing with their agents.  However, in concentrating upon the Regulations, principals appear to have overlooked the fact that the anti-discrimination legislation associated with employment is not limited to the employment field and could also apply to agents.

Existing anti-discrimination legislation applies to the relationship between a principal and a contract worker.  However, the legislation defines “principal” as a person who makes work available to individuals who are employed by another person who supplies them under a contract made with the principal.  A “contract worker” is defined as any individual who is supplied to the principal under such a contract. 

Whilst these definitions imply that self-employed contractors are not covered, in 1996, the Employment Appeal Tribunal decided that a self-employed contractor whose fixed term contract was found not to have been renewed because she was pregnant was covered by the Sex Discrimination Act 1975 (“SDA”) and had suffered discrimination contrary to the SDA.  Other cases indicate that the courts have sought to interpret the definition of contract worker in existing anti-discrimination legislation widely so as to confer fuller protection to contract workers.

On this basis, it may well be that an agent falls within the scope of a contract worker.

Sex Discrimination – Under the SDA, a person discriminates against a woman if on the grounds of her sex he treats her less favourably than he treats or would treat a man.  The right to complain of sex based discrimination is not restricted to employees; there are specific provisions relating to discrimination against contract workers by their principals.

The SDA makes it unlawful for a principal to discriminate against a female agent in the terms on which she may work or is afforded access to benefits, facilities or services, by not allowing her to work or to have access to such benefits, facilities or services or by subjecting her to any other detriment.  Accordingly, terminating an agency agreement for a sex based reason (which of course includes the agent’s pregnancy, pregnancy related illness or maternity) could amount to discrimination contrary to the SDA. 

Race Discrimination – The Race Relations Act 1976 (“RRA”) applies in the same way.  As such, if a principal refuses, say, to appoint a commercial agent, treats the agent less favourably to its other agents or terminates the agency agreement on the grounds of colour, race, nationality or ethnic or national origins, it will have discriminated against the agent contrary to the RRA.

Disability Discrimination – The Disability Discrimination Act 1995 (“DDA”) only applies to principals and agents contract workers in certain circumstances.  Currently, the DDA will not apply to principals with an aggregate number of employees, agents and contract workers of less than fifteen. This exemption is to be removed by 2 December 2006 pursuant to a European Directive.

The DDA makes it unlawful for a principal to discriminate against a disabled person in the terms on which he may work or is afforded access to benefits, facilities or services, by not allowing him to work or to have access to such benefits, facilities or services or by subjecting him to any other detriment.  The principal is also under a duty to make reasonable adjustments so that the disabled person is not at a disadvantage in comparison with others who are not disabled.

“Disability” is defined extremely widely in the Act.  A person is disabled within the meaning of the DDA if he has a physical or mental impairment which has a substantial and long term adverse effect on his ability to carry out normal day to day activities.  Long term means an illness which lasts or is expected to last at least twelve months. 

Accordingly, principals should take care where an agent becomes ill or an agent’s performance substantially deteriorates.  Further, because it is not necessary for a person to have knowledge of a disability in order to discriminate on grounds of disability, it would be prudent for a principal to make enquiries into the agent’s illness or declining performance before taking any action.

Unlike discrimination on the grounds of sex or race, it is possible to justify discrimination on grounds of disability.  But the reason for such discrimination, or failure to make reasonable adjustments, must be both material to the circumstances of the particular case and substantial. 

Nevertheless even if a principal successfully justifies disability discrimination, he will not be able to justify termination of the agency without liability to pay compensation to the agent under the Regulations.  This is because the Regulations provide that an agent is entitled to receive compensation from his principal in the event that the agency is terminated as a result of the agent’s infirmity or illness, in consequence of which the agent cannot reasonably be required to continue his activities.

Age discrimination – Whilst they do not specifically address the above forms of discrimination, the Regulations are perhaps the first piece of legislation to offer protection against “ageism.”  This is insofar as the Regulations provide that a principal must pay compensation to an agent upon his retirement from the agency.  However, this is subject to the requirement that the agent’s retirement is justified on grounds of age in consequence of which the agent cannot reasonably be required to continue his activities under the agency.

At the present time, there are no specific rules prohibiting discrimination on grounds of age in the United Kingdom.  However, the UK Government is required to introduce legislation against age discrimination by 2 December 2006, pursuant to a European Directive.

Compensation – The liability of a principal to an agent against whom it has discriminated contrary to the SDA, RDA or DDA is unlimited and is based on the agent’s losses arising from the act of discrimination.  As well as compensation, an award may also be made to an agent who has suffered discrimination for injury to feelings. 

Commercial agents have a right to be compensated or indemnified (amongst other things) on termination of the agency in most circumstances.  In view of this, where a principal has terminated the agency as a result of sex, race or disability discrimination, it may well face an additional liability for unlimited compensation under the relevant piece of anti-discrimination legislation in addition to a claim by the agent for compensation or an indemnity under the Regulations.          

This briefing note is for general information. For advice in applying this general information to your specific circumstances, please contact Stephen Sidkin or any members of the Fox Williams’ agentlaw team. (www.agentlaw.co.uk).

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