Agents are not entitled to a termination indemnity if they take early retirement

21 July 2023

The Italian Supreme Court recently ruled that an agent who retires with early pension requirements is not entitled to the termination indemnity since this case is not included among the exceptions outlined in Article 1751 of the Italian Civil Code that allows an agent who withdraws from the relationship to obtain such an indemnity.

The Supreme Court, in its decision No. 17235 of 2023, confirmed that the termination indemnity pursuant to Article 1751 of the Civil Code is not due if the agent terminates the contract to take an early retirement scheme.

Preliminarily, we shall clarify that Article 1751 of the Civil Code provides that the termination indemnity is not due in the event of termination by the agent, except in the case of termination justified by circumstances depending on the principal or by circumstances related to the agent, such as age, infirmity or illness, for which the continuation of the activity can no longer be reasonably requested to him.

The case examined by the Court stems precisely from an appeal against a second instance judgment by an agent who, having resigned after accruing the right to an early retirement pension, claimed the payment of the termination indemnity.

The Court of Appeal had rejected the agent's claims based on the wording of Article 1751, also pointing out that the 2009 Economic Collective Agreement for Commercial Agents (ECA), as applied to the relationship at issue, also acknowledged the right to such an indemnity only in the event of termination related to agent's access to an old-age pension with complete requirements.

On the other hand, the agent argued that the early old-age pension was to be considered as falling within the exceptions of Article 1751 of the Civil Code since it is meant to anticipate the retirement age requirement in case of considerable length of service.

The Supreme Court, however, confirmed the second instance ruling, clarifying that the use of the term 'age' in Article 1751 of the Civil Code, alongside those of 'infirmity' and 'illness', makes clear that this provision aims at limiting the right to the indemnity only to cases of an absolute impediment to activity, thus referring to the age limits for old age retirement only.

Finally, about the exception raised by the agent concerning the application of the ECA – the agent argued that the 2009 version of this agreement did not provide for the entitlement to the indemnity because the early age pension at issue had been introduced in 2011, so the Court of Appeal should have interpreted the rule taking into account the 2017 renewal of the same agreement, providing for such an entitlement – the Supreme Court stated that the introduction of a specific new provision in 2017 should be construed as a confirmation of an application of a different regime under the previous version of the ECA.

2024 - Morri Rossetti