Finland

Agency Law in Finland

Implementing legislation

Law no. 417 of 8.5.1992.

Proper notice

• 1 month if less than or equal to 1 year;
• 2 months if more than or equal to 1 year and less than 2 years;
• 3 months if more than or equal to 3 years and less than 4 years;
• 4 months if more than or equal to 4 years and less than 5 years;
• 5 months if more than or equal to 5 years and less than 6 years;
• 6 months if more than or equal to 6 years.

Indemnity or compensation or both

Indemnity only.

Calculation of indemnity/compensation

Capped at a maximum of the average annual commission over last 5 years or, if less than 5 years, over duration of agency.

Pre-termination commission

Yes.

Post-termination commission

Yes.

Back commission

Yes.

Other entitlements

Right to specific benefits such as daily allowances.

Restrictive Covenants

Implementing Legislation

Commercial Representatives and Salesmen Act (417/1992)

Contracts Act (228/1929)

1) Under Finnish law is it possible to have a restraint of trade clause operating during the agency agreement and, if so, is it subject to any qualifications?

According to section 6 of the Finnish Act on Commercial Representatives and Salesmen (417/1992), a certain degree of the agent’s trade activities are restrained. Under section 5(1) of the Finnish Act on Commercial Representatives and Salesman a commercial agent may accept tasks from other persons besides the principal only if this is not contrary to the obligations of the commercial agent. Section 5(1) requires the agent to take into consideration the interests of the principal, act dutifully and in good faith towards him as well as comply with any reasonable instructions given by the principal.

As section 6 of the above Act is not mandatory, the parties may agree on a more draconian restraint of trade clause that operates during the agency agreement. Such a restraint of trade clause is subject to the qualification of not being unfair to the agent. An unreasonable or unfair term can be adjusted or set aside by the court as different kinds of contracts (and their unfair terms) are governed in Finland by sections 36 and 38 of the Contracts Act (228/1929). However, situations where the Contracts Act could be applied to an agency agreement are rare and there are no Supreme Court precedents regarding such cases.

2) Under Finnish law is it possible to have a restraint of trade clause operating following the termination or expiry of the agency agreement and, if so, is it subject to any qualifications?

It is possible under Finnish law to have a restraint of trade clause operating following the termination or expiry of the agency agreement.

Section 31 states that such a restraint of trade clause is valid only if:

1. it is in writing;
2. it relates to the geographical area or the group of clients entrusted to the commercial representative; and
3. it relates to the kind of goods covered by the representation contract.

A restraint of trade clause is not valid for more than two years after the termination of the contract.

Please note, that, as yet, there have been no reported Supreme Court precedents concerning the Act on Commercial Representatives and Salesmen.

agentlaw.co.uk wishes to thank Sivenius, Suvanto & Co Oy, attorneys-at-law, Helsinki for its contribution to this page.