CJEU Settles Long-Standing Debate: Settlement Agreements With Commercial Agents During the Notice Period Are at Risk

For years, many businesses have followed the same playbook when ending a commercial agency relationship: send the termination notice, then use the notice period to negotiate a quick, cost-effective settlement before things get complicated.

On 23 April 2026 Europe’s highest court put a definitive end to that approach. In its ruling, the CJEU held that a commercial agency agreement ends only on the date the notice period expires — meaning that the agent retains the full benefit of the contract, including all statutory entitlements, until that date. It follows that any settlement concluded during the notice period that falls short of those entitlements is potentially null and void, regardless of whether the agent signed willingly.

For businesses that regularly work with commercial agents, the implications are far-reaching.

The Background

The legal framework governing commercial agency relationships across the European Union is set out in Directive 86/653/EEC of the Council of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents. The Directive was adopted because differences between national laws on commercial agency significantly affected competition and the protection afforded to agents in their dealings with principals. In Belgium, these rules were incorporated into the Code of Economic Law (“WER”) by the Act of 2 April 2014, which inserted Book X into that Code.

Under Article X.16 WER, each party has the right to terminate a commercial agency agreement subject to a notice period of one month during the first year, increasing by one month for each commenced year, up to a maximum of six months. After termination, the agent is entitled to a goodwill indemnity where the agent has brought the principal new clients or significantly expanded transactions with existing clients, to the extent this continues to provide the principal with substantial advantages. Crucially, Article X.21 WER provides that before the agency agreement has ended, parties may not derogate from these provisions to the detriment of the agent — making them mandatory rules that cannot simply be contracted out of.                                                                                            

Belgian courts had held that agents regained their contractual freedom from the date on which they received notice of termination — even if performance of the agreement continued until the expiry of the notice period — and could therefore freely dispose of their rights at that point. The Brussels Court of Appeal confirmed this approach in a judgment of 19 June 2023. The Belgian Court of Cassation concluded that the dispute could only be resolved by answering the question of when a commercial agency agreement must be considered as ended within the meaning of Articles 15(2) and 19 of Directive 86/653 and accordingly referred to the CJEU for a preliminary ruling.

What the CJEU Decided

The Court was asked, in essence, whether Articles 15(2) and 19 of Directive 86/653 must be interpreted as meaning that a commercial agency agreement ends on the date the agent receives — or could reasonably have received — notice of termination, or only on the date the notice period expires.

The answer is unambiguous: the agreement does not end on the date the agent becomes aware or could reasonably have become aware of the termination, but only on the date the notice period expires. Three considerations drove that conclusion.

Until the notice period expires, the agent must continue to perform the agreement and remains financially dependent on the principal. Only after the actual termination of the obligations inherent in the agreement — at the end of the notice period — does the agent cease to be dependent on the professional income granted by the principal.

Articles 17 and 19 of the Directive specifically aim to protect the commercial agent after the termination of the agreement, and that regime is mandatory. Any interpretation of these articles that could be to the detriment of the agent is excluded — they must be interpreted in a manner that contributes to the protection of the agent.

Parties may not agree on shorter notice periods than those prescribed by the Directive, demonstrating that the EU legislator intended to protect the agent throughout the entire notice period.

The Court expressed the point with particular clarity in its operative reasoning: if a terminated agency agreement were deemed to have ended from the date on which the agent receives notice of termination, the protection of that agent vis-à-vis the principal would be diminished, contrary to the objectives pursued by the Directive. Since the need for that protection only disappears upon the expiry of the notice period, the agreement ends on that date.

The Court also flagged a specific concern worth noting for principals: it is not inconceivable that a principal might decide to terminate an agency agreement precisely at the moment when the business relationship with the clients brought in by the agent is flourishing, in order to minimise the amount of the compensation payable — since the earlier the agreement is terminated, the lower that amount is likely to be. The ruling closes off the further tactic of then pressing for a cheap settlement before the notice period has run.

What Changes in Practice

The consequences for businesses working with commercial agents are significant:

• Settlements during the notice period are legally precarious. A derogation from Article 17 of the Directive is only permissible where it has been established ex ante that it is not to the detriment of the agent after termination of the agreement. Any agreement that shortchanges the agent on mandatory entitlements — whether on the goodwill indemnity under Article X.18 WER, additional compensation under Article X.19 WER, or the notice indemnity under Article X.16 WER — is potentially null and void, regardless of whether it was signed voluntarily.
• Full statutory indemnities are a real risk. If a settlement is set aside, the principal faces the full legal indemnities, including goodwill indemnity — which may amount to up to one year’s average remuneration, calculated on the basis of the average of the five preceding years — plus potentially additional damages.
• Existing settlements may be at risk. Where settlements were concluded during notice periods in the past and disputes remain live or limitation periods have not yet expired, agents now have a clearer legal basis to challenge those agreements.
• Standard termination processes should be reviewed. Businesses with established procedures for managing commercial agency terminations should reassess those processes in light of this ruling.

Conclusion

The notice period is now, unambiguously, a legally protected zone: a commercial agency agreement does not end on the date the agent receives notice of termination, but only on the date the notice period expires. The practical message is straightforward: if a binding and durable settlement with a commercial agent is the objective, the right moment to conclude it is after the notice period has fully expired.

Written by

• Alexander Hansebout

  Partner

• Sam Niyonzima

  Associate