Agents, who are one of the key actors in commercial life, act as continuous and independent intermediaries on behalf of their principals. Turkish Commercial Code numbered 6102 The TTK has introduced certain special regulations to protect the labour of the agent. At the forefront of these are portfolio compensation (indemnity claim) and agent's security.
In this article, we will examine the conditions, scope, and calculation method of the portfolio compensation that the agent can claim after the termination of the contract, as well as the application of the agent's guarantee and the issues that need to be taken into consideration.
Legal Basis of Portfolio Compensation
According to Article 122 of the Turkish Commercial Code, when the agency agreement is terminated, the agent is, under certain conditions, entitled to a fair and equitable compensation may request.
The balancing claim is not compensation in the traditional sense. The purpose here is not to remedy damage arising from fault, but to ensure that the agent receives a fair share of the customer portfolio that they have brought to the principal. For this reason, in practice, it is referred to by names such as portfolio compensation, customer compensation, or balancing claim.
Conditions for Entitlement to Portfolio Compensation
According to the provision of Article 122 of the TCC, three basic conditions must be met together for the commercial agent to be able to claim portfolio compensation:
- Acquisition of new customers and provision of benefits: The agent must acquire new clients for the principal through its activities, and the principal must continue to generate revenue from these clients even after the contract has terminated.
- Loss of earnings: Upon termination of the contract, the agent must be deprived of the commission or similar income to be derived from these customers.
- Equity Depending on the circumstances of the specific case, the payment of compensation must be fair and equitable. The Court of Cassation also places significant emphasis on this criterion in its jurisprudence.
Circumstances in which Entitlement to Portfolio Compensation Does Not Arise
The agent cannot assert this right in every circumstance. The claim for portfolio compensation is rejected in the following situations:
- Of the agency terminating the contract without a valid reason,
- Of the agency termination of the contract by the client for a just cause due to fault,
- the agency's contract transferring it to a third party and the client accepting this transfer.
Calculation of Portfolio Compensation
According to the law, the amount of compensation for the agent's last five-year operating period is calculated on the basis of. If the contract has lasted for a shorter period, the period during which the activity continued is taken as the basis.
- Upper limit: Compensation cannot exceed the agent's average annual commission or payments over the last five years.
- Request duration: The balancing claim, from the termination of the contract onwards within a year It must be brought. This time limit is a forfeiture period.
- Indispensability: It is not valid for the agent to waive portfolio compensation while the contract is ongoing.
It has been accepted in the decisions of the Court of Cassation that even if the contract is for a fixed term and expires, the commercial agent may claim portfolio compensation if the conditions have been met.
Agent Guarantee
Unlike portfolio compensation, the agency guarantee is provided to safeguard the principal's interests. It is particularly common in the insurance sector.
Types of Collateral
- Cash collateral: Depositing a certain amount of money.
- Bank guarantee letter: Bank guarantee.
- Bail Assumption of the agent's debt by a third party.
Refund of Deposit
When the contract expires, if it is determined that the agent has fully fulfilled its obligations, the security deposit is refunded.
The Importance of Portfolio Compensation and Agent Guarantee
- Portfolio compensation, protects the agency's effort and contribution.
- Agency guarantee, indemnifies the client against potential damages and risks.
When evaluated together, these two mechanisms serve to ensure that the agency agreement is conducted in a balanced and reliable manner for both the agent and the principal.
Portfolio Compensation in Turkish Law
Frequently Asked Questions (FAQ)
Here you can find the answers to the most frequently asked questions regarding the process of terminating an employee's contract for a valid reason. If you cannot find the answer you are looking for, for detailed information and support you can get in touch with us.
Is it compulsory to file a lawsuit for a portfolio compensation claim?
No, first a solution can be sought through negotiation between the parties. However, if an agreement cannot be reached, legal proceedings must be initiated.
Are portfolio compensation and severance pay the same thing?
No. While portfolio compensation arises from commercial agency agreements, statutory severance pay is a right related to labour law.
What is the limitation period for portfolio compensation?
According to the TCC it is 1 year. However, if the termination took place during the period of the former TCC, the period is 10 years.
Is compensation payable if the client has not acquired new customers?
No. For portative compensation, the acquisition of new customers is a requirement.
Is agency cover compulsory in every sector?
No. It appears more commonly in insurance agencies, but it can also be provided for in other sectors by agreement of the parties.
Can portfolio compensation be waived in advance?
No, by law this right cannot be waived in advance.
Result
In agency agreements, portfolio compensation is an important right recognised to ensure the agent's labour does not go unrewarded. To be entitled to this compensation, the conditions of acquiring customers, loss of remuneration and equity must be met together. The claim must be brought within one year from the termination of the contract, and waiver in advance is not valid.
Additionally, the practice of agency guarantees protects the client's interests while contributing to the smooth conduct of the commercial relationship on a solid foundation.
As Azel Law and Consultancy, we meticulously protect our clients' rights in disputes that may arise from agency agreements, and offer comprehensive legal consultancy regarding portfolio compensation and agency collateral. You can contact us for further information and professional support.
