The VRP contract establishes a specific legal framework between the company and its representative. If it is properly drafted, the parties will have legal certainty. The obligations arising from it deserve attention, as they define the rights and responsibilities of each party. Understanding these contractual mechanisms will help you avoid the frequent disputes that arise in this area.
The form of the sales representative contract
A written contract is not required in order to qualify as a sales representative. The 1957 reform abolished this requirement. Better still, article L. 7313-3 of the French Labour Code establishes a presumption of application of the status of VRP in favour of persons exercising representation without a written contract.
This presumption applies only in the absence of a written contract. The representative must simply prove, by any means, that he or she is acting as a representative on behalf of a specific person. The employer may, however, rebut this presumption by demonstrating that the conditions for application of the statute are not met.
In some cases, however, it is compulsory to put the contract in writing:
- For fixed-term contracts (art. L. 1242-12 of the Labour Code)
- For intermittent employment contracts (art. L. 3123-34 of the Labour Code)
- For part-time contracts (art. L. 3123-6 of the Labour Code)
In practice, it is strongly recommended that relationships are formalised in writing. It avoids numerous disputes over the essential terms of the relationship, in particular the definition of the sector and the terms of remuneration.
The essential content of the sales representative contract
The trial period
The contract may provide for a trial period. The maximum legal trial period is three months (art. L. 7313-5 of the French Labour Code). This period is mandatory and may not be extended, even with the agreement of the parties.
During this period, either party may terminate the contract, subject to a notice period. For the sales representative, this notice period is at least 48 hours (24 hours if they have been with the company for less than eight days). For the employer, this period varies from 24 hours to two weeks depending on seniority.
Termination during the trial period excludes entitlement to customer compensation, but entitles the employee to commission on returned samples and compensation for paid holidays.
The exclusivity clause
This clause obliges the sales representative to work only for the company that employs him. In this case, the sales representative becomes "monocarte" or "exclusive".
Case law has redefined the conditions for the validity of this clause since 2000. It must now be :
- Justified by a legitimate business interest
- In line with the employee's function
- Proportionate to the aim
The Court of Cassation has ruled that a sales representative "hired on an exclusive basis may not be required to work part-time" (Soc. 11 July 2000). This clause entitles the employee to the minimum lump-sum payment provided for in the national inter-professional agreement.
A ban on competing representations
The contract may prohibit the sales representative from taking out new representation cards. For multi-card sales representatives, the contract must contain :
- Declaration of companies or products already represented
- A commitment not to take on any new performances without prior authorisation
Violation of a prohibition clause generally constitutes serious misconduct. Even in the absence of a specific clause, the principle of loyalty requires a sales representative to seek the employer's authorisation before taking out a new card, especially if it is a competing card.
Sales quotas
The contract may set numerical targets to be achieved. Case law has consistently held that failure to meet quotas does not in itself constitute grounds for dismissal. Judges assess whether :
- The objectives were realistic
- The employee is at fault for not achieving them
As the Court of Cassation has ruled, targets may be set unilaterally by the employer (Soc. 22 May 2001), but they must be "achievable and brought to the employee's attention at the start of the financial year" (Soc. 2 March 2011).
Resolutory clauses for failure to achieve objectives are condemned by case law.
Remuneration
The precise determination of remuneration is crucial. The contract must specify :
Commissioned orders The contract generally distinguishes between direct orders (collected personally by the sales representative) and indirect orders (sent directly to the employer by customers in the sector). The right to commission on indirect orders is not automatic and must be provided for contractually.
The chargeable event Unless otherwise specified in the contract, the right to commission arises as soon as the order is accepted by the employer. However, the parties may agree on another triggering event (delivery, payment of the price).
Commission base It generally corresponds to the price invoiced to the customer, including taxes and charges, unless otherwise stipulated.
Commission rates This is left to contractual discretion and may vary according to the nature of the products, customer categories or quantities sold.
The post-contractual non-competition clause
This clause prohibits a sales representative from competing with his former employer once the contract has been terminated. Its validity is subject to four cumulative conditions:
- Be essential to the protection of the company's legitimate interests
- Be proportionate to the aim pursued
- Limited in time and space
- Include financial compensation
The national interprofessional agreement limits its duration to a maximum of two years and restricts its scope to the sectors and categories of customers visited by the representative.
The employer must waive this clause within 15 days of being notified of the termination.
Mutual obligations during performance of the contract
The obligations of a sales representative
Carry out the mission personally Sales representatives must prospect for customers themselves. They cannot delegate this task without losing their status.
Comply with instructions Sales representatives must comply with the employer's instructions while retaining a degree of autonomy in the conduct of their business.
Acting loyally This obligation prohibits, in particular, disparaging the employer's products, engaging in acts of competition or diverting customers.
Reporting on your activity Although not required to obtain the status, this obligation is binding on the VRP. Failure to fulfil this obligation generally constitutes serious misconduct.
Preserving the collection The sales representative must take the utmost care in looking after the samples entrusted to him.
The employer's obligations
To enable the mission to be carried out The employer must provide the sales representative with all the necessary information (collection, samples, documents, price lists) and refrain from any direct or indirect competition in the assigned sector.
Reimburse business expenses According to case law, "expenses incurred by an employee for the purposes of his professional activity must be reimbursed to him without being deducted from his remuneration" (Soc. 25 February 1998). The employer may opt to reimburse actual expenses or pay lump-sum allowances.
Paying remuneration Payment of commissions must be made at least every three months. The sales representative is entitled to monthly instalments. Any change in remuneration conditions requires the express and unequivocal agreement of the sales representative.
Application of social legislation
VRPs enjoy most of the benefits granted to employees:
Membership of the general social security scheme VRPs are compulsorily affiliated to the scheme, but there are special rules for multi-stakeholder VRPs concerning the distribution of contributions between employers.
Supplementary pension and provident scheme Three schemes exist depending on the status of the VRP (executive, exclusive non-executive, multi-card).
Paid leave and family events VRPs are entitled to statutory leave, supplemented by the provisions of the national inter-professional agreement.
Suspension of employment contract : The legal rules apply, with specific compensation provided for in the inter-professional agreement in the event of illness, accident or maternity.
On the other hand, certain benefits are excluded because it is impossible to monitor the working hours of VRPs:
- Legislation on working hours
- Overtime
- The minimum wage
- Partial activity (formerly short-time working)
For personalised support in drafting or analysing your sales representative contract, our law firm can provide you with the legal insight you need. Our expertise can help you secure your contractual relations and prevent the risk of litigation.
Sources
- French Labour Code, Articles L. 7311-1 to L. 7313-18 and D. 7313-1
- National interprofessional agreement for sales representatives of 3 October 1975
- Case law of the Cour de cassation relating to VRP contracts
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