For commercial agents, commission is more than just compensation, it’s often the core financial incentive behind the agency relationship. Yet one of the most common and disruptive challenges agents face is non-payment or underpayment of commission by their principals.
Whether the issue arises from unclear reporting, disputed sales, changes to the commission structure, or insolvency of the principal, agents are not without legal recourse. The Commercial Agents (Council Directive) Regulations 1993 provide specific protections to ensure agents receive the remuneration they’re owed, and, where appropriate, compensation for breach or termination.
In this blog our Commercial Agency experts explore:
- The practical steps to take if your principal fails to pay commission
- How much commission you should be entitled to, and what happens if your principal tries to reduce it
- Your rights when a principal becomes insolvent or enters liquidation
- Why timely legal advice can help you recover what you're owed and protect your income
What do I do if my principal doesn’t pay me the commission due?
One of the most common issues faced by commercial agents is non-payment of commissions by principals.
Steps to Take If Your Principal Isn’t Paying Commission
If you suspect your principal isn't paying your commission fully or correctly:
- Request Detailed Sales Information: You're entitled to request detailed sales data from your principal to verify commissions owed.
- Engage in Discussions with Your Principal: Clearly document your concerns and formally request clarification or payment.
- Seek Legal Advice Promptly: If discussions don’t resolve the issue, consult legal experts immediately. You have rights under the Commercial Agents Regulations, and specialist solicitors can help enforce them.
- Consider Legal Action or Termination: If payment is withheld unjustly, you may have grounds to terminate your agency agreement while preserving your right to claim compensation or an indemnity under the Commercial Agents Regulations.
How much commission should a commercial agent receive?
At the outset of the commercial agency relationship, the agent and principal should agree on the amount of commission to be paid. The commercial agent and principal can also agree to vary the amount of commission paid during the agency relationship, if desirable.
If the principal seeks to change the agent’s commission structure, the agent may be able to resist such a change depending on the terms of the commercial agency agreement.
- Set Clear Terms Early: Agree clearly and explicitly in writing how your commission is calculated.
- Variation During the Relationship: Both parties may agree to change the commission structure, but this usually requires mutual consent.
- Resisting Unfair Changes: If your principal attempts to unilaterally change the commission agreement unfairly, you can legally resist based on the terms of your existing agreement.
What if my principal goes bust?
Unfortunately, there are circumstances when principals may face insolvency or liquidation:
- Claims Against Insolvent Principals: You may still submit claims for outstanding commission or termination payments through the appointed liquidator or administrator.
- Expectation of Payment: However, the payments you recover may be significantly lower than your original entitlement. Acting swiftly and securing early legal advice can improve your chances of recovering at least partial payments.
Need Advice on Unpaid Agency Commission?
Contact our Dispute Resolution Solicitors today to discuss your commission disputes or any commercial agency issues. Our experienced solicitors are ready to help protect your commercial interests.
0161 941 4000