Update - The Commercial Agents Regulations are here to stay

In May 2024 the then UK Government launched a consultation on whether to repeal the Commercial Agents (Council Directive) Regulations 1993 (“CARs”), an instrument of retained EU law granting additional rights to commercial agents. On 13 February 2025 the current government announced that the CARs would remain in force without amendment. Whilst the consultation was framed as an opportunity for the UK to harness its new-found regulatory freedoms following its exit from the European Union, from the consultation responses it appears that the majority of both agents and principles will welcome the decision to leave the CARs in place as this ensures consistency for those navigating these complex business arrangements. 

For more information about how the CARs operate please see our previous article regarding the consultation here. 

Main findings of the Consultation

The consultation garnered eighty-six responses of which over 70%, were commercial agents, predominantly sole traders or small businesses with 1 to 49 employees. The feedback revealed a distinct polarisation of views, particularly between commercial agents and principals. 

Commercial agents stressed that the CARs provide protection against larger companies on the termination of contracts – particularly on the levels of compensation that may be payable. In addition, they also function as a contract in the absence of a written one and, therefore, provide clarity. They help to provide a clear framework when engaging with principals and function as a form of employment protection for sole traders. If they were repealed it could make it harder for commercial agents to negotiate contracts with principals and could result in making the profession of commercial agents less attractive with fewer people joining it.

On the other hand, principals who responded were critical of the CARs, arguing that they are weighted in favour of commercial agents providing an unequal business relationship. They prevent principals’ ability to negotiate their own terms on compensation and indemnity and in some situations can prevent the services of underperforming commercial agents from being terminated. Finally, they only apply to goods and not services contracts. 

Conclusion of the Consultation

Overall, the feedback from the consultation indicated that the CARs are effective for commercial agents and are well understood by respondents. These regulations provide necessary protections to commercial agents when negotiating contracts with principals, who often represent larger businesses.

Although some principals mentioned that the CARs restrict the ability to freely negotiate contracts between commercial agents and principals, there was not significant evidence to suggest this is a major issue requiring change.

We regularly advise on issues relating to the CARs so please get in touch with the authors of this update should you have any questions regarding them.