The Austrian Supreme Court recently decided that commercial agents are not entitled to claim compensation payments in the case of a termination of the contractual relationship due to merely temporary illness. In the reasons stated for this decision, the Supreme Court refers to the provisions of social security law, according to which an illness is only categorised as long-term starting from a duration of at least 26 weeks.

Pursuant to section 24(1) Commercial Agents Act (HVertrG) 1993, a commercial agent may claim appropriate compensation after the termination of the contractual relationship if and to the extent

(i) that he introduced new clients or significantly enhanced existing business connections,

(ii) it is to be expected that the entrepreneur or its legal successor will be able to gain considerable advantages from such business connections also after the termination of the contractual relationship, and

(iii) that, taking into consideration all circumstances, the payment of compensation is fair and equitable.

However, no such claim for compensation arises if the commercial agent terminates the contractual relationship himself, unless the commercial agent cannot be expected to continue his work, e.g. due to illness.

An illness is deemed to exist if a health disorder is severe and its duration is not foreseeable and if it thus leads to a long-lasting disruption of marketing activities for the entrepreneur, which cannot be remedied even with the help of replacement operatives. The commercial agent is obligated to bridge any mere short-term prevention, e.g. by using auxiliary staff (Nocker, HVertrG², section 24, paragraph 339).

In the context of the facts underlying a decision currently handed down by the Supreme Court (OGH 29/1172016 9 ObA 125/16x), the commercial agent argued that he had terminated the contractual relationship preserving his claim for compensation as he could no longer reasonably be expected to continue his work due to illness. In the case at hand, however, there was a high probability from an ex ante point of view that the commercial agent could reasonably be expected to resume his previous work after four or six months at most.

The Supreme Court confirmed the decisions of the lower-instance courts according to which the continuation of the contractual relationship could be reasonably expected, within the meaning of section 24(3)(1) HvertrG 1993, as the claimant was only temporarily unable to carry out his work for the company (defendant).

It is remarkable that the Supreme Court explicitly refers to the provision set out in section 139(1) Act on General Social Security (ASVG), pursuant to which the health problems of an employee only entitle him to terminate his employment relationship if it is to be expected that the illness will last longer than the mentioned period (26 weeks) (OGH RIS-Justiz RS0060144).

Even though the assessment of what can reasonably be expected or not within the meaning of section 24(3)(1) HVertrG is still dependent on the circumstances and facts of the individual case (OGH 16/09/2011 9 ObA 105/10x), the reference made by the Supreme Court to the provisions of ASVG is a powerful argument for an incapacity to work due to illness within the meaning of HvertrG being deemed to exist only if the illness lasts more than 26 weeks. In view of these considerations it follows that a commercial agent will not be entitled to claim compensation if his health problems do not exceed this period.