Status of Direct Sellers

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Argentina
No legislation. Several jurisprudence applicable to individual D.S. companies, in litigations from both Social Security Agencies and Direct Sellers (claiming for employee status), are stating independent status.

However, the relationship between companies and direct sellers needs to be carefully structured in order to ensure that direct sellers:

• do not act under orders from a company,
• have the freedom to select merchandise to be sold,
• accept their own business risk.

Australia
The majority of direct selling organisations in Australia operate under wholesale (buy/resell) arrangements, where legal ownership of products is transferred from the organisation to the salesperson before being passed on to the consumer. Commission arrangements, where property or ownership is retained by a direct selling organisation until payment by a consumer, remains as the model used by a minority of DSAA members. Direct sellers are generally independent contractors. Contractual documentation establishes the criteria for this status and the relationship between organisations and direct sellers must reflect this in substance. The independent contracting status, as opposed to employment, is pivotal for the treatment of taxation, superannuation, workers compensation, workplace safety and other issues.

Austria
Direct sellers are mostly independent but there are also direct selling companies with a number of employees. Non-employees acting regularly as direct sellers over a period of time have to obtain a trading licence. As independents, they are exempted from the wage/hours provisions of the labour laws.

Belgium
There are two (2) categories:

1. Salaried
   >The salaried seller is under the employer’s authority through an employment contract. There is a minimum salary fixed by law and generally payment of commissions. The employee may be employed full or part time. This status is generally expensive for the employer.
2. Independent
   >For independent status there must be no chain of subordination and the employer may not supervise, manage or exercise authority over the independent seller, nor have the possibility to do so. One must avoid any sign that would lead to the belief that there is a chain of subordination. The independent person must be free to exercise other non-competitive activities. He cannot be obliged to submit reports, have obligatory training imposed upon him or be bound by fixed hours or holiday dates.
   >The independent sellers’ activity may be exercised in different ways – as dealer, buyer-seller or on a commission basis. The independent seller is responsible for all charges incurred by his social security and fiscal status.

Brazil
DIRECT VENDOR ‘S STATUTE
1. Direct Sales – The direct sales should be understood as the one whose products and services are presented directly to the consumer through personal explanation and demonstrations.

2. Direct Vendor – The direct vendor’s activity may be held through employment relationship, autonomous job, or moving commerce, being the last one, almost in whole, predominating; that is why the other methods will be mentioned only to be know.

3. Employment Relationship – The direct vendor, subject to employment relationship, held the non-eventual job under dependence and wage.

The Statute of Laborers Consolidation (decree number 5.452, dated May the 1st, 1943) disciplines the employment relationship establishing the rights and obligations of employee and employer.

4. Autonomous Job – The direct vendor, without the employment relationship’s subordination, promotes direct sales in an autonomous way, placing orders for the company, which he represents.

The law number 4.886 dated December the 9th, 1965 disciplines the relationship between the autonomous vendor and the represented company.

5. Moving Commerce or Door-to-Door: in compliance with Brazilian Civil Code (Law number 10.406 dated January, 10th, 2002) ) it can be merchant in the country every people who are free in the management of their persons and their own possessions, and do not be forbidden by the law.

The moving merchant is obliged to enroll himself in the Social Welfare, in the autonomous category.

As from Promulgation of the Law number 6.586 on November the 6th, 1978 the direct sales by the moving vendor had passed to be disciplined separately, being confirmed the vendor’s fitting as moving merchant.

The mentioned law regulates that consider moving merchant those who, personally, and by his own account and risks, holds small commercial activity in thoroughfares or door-to-door.

It was forewarned in the 2nd Article of this law that will not be considered as moving merchants those who hold activities in conditions that characterizes the existence of employment relationship with good’s supplier.

The moving merchant, according to Decree number 486 of 03/03/69, is released to follows uniform order of deed, using adequate books and papers, since they are included in the following hypothesis:

• Handmade nature activity;
• Predominance of own job, or familiar job, although the activity is organized;
• Capital effectively applied;
• Gross year income;
• Special conditions activities, which reveal the exiguity of existing commerce.

Canada
In many direct sales companies, the legal relationship between the sales force and the direct seller can be defined as one of independent contractor status. Canadian court decisions over the years have employed various criteria to distinguish between employees and independent contractors. The degree of control has been and remains the ultimate test. Some of the criteria for an independent contractor relationship are:

1. No control over hours worked and no supervision over the manner in which the work is performed;
2. No entitlement to benefits;
3. Assumption of risk of loss;
4. Investment in facilities, equipment;
5. Selection of materials and tools for work;
6. Power to set the sale price of the products sold;
7. Method of payment;
8. Duration of time engaged to do the work.

Independent contractors do not incur those obligations to which they would ordinarily be subject as employees. An employer/employee relationship triggers certain statutory responsibilities under provincial labour standards legislation as:

• Federal and provincial income tax acts;
• Labour standards legislation (including workers’ compensation laws, maternity benefits, annual leave);
• Employment insurance; and
• Health insurance.
• Canada and Quebec Pension

Chile

All the direct selling companies associated to the Chilean DSA (Cámara de Venta Directa de Chile, A.G.) sell their products through independent sellers or distributors, with whom the relevant company has executed a commercial mandate or a distribution agreement, as the case may be, in which it is established that there is no labor relationship between the direct selling company and the corresponding independent seller or distributor. Additionally, such independent sellers or distributors do not qualify as “employees” under Chilean Labor Law test (there are local administrative and judicial precedents that up-hold this conclusion).

Columbia
There is no specific legislation defining the direct seller status but one is considered as a person with an independent status without labor relationship with the company.

However, the relationship between companies and direct sellers needs to be carefully structured in order to ensure the direct sellers independent status:

• Do not act under orders from a company.
• Have the freedom to select merchandise to be sold.
• Accept their own business risk.
• Do not impose goal fulfillment by the company.
• No exclusiveness.

Czech Republic
There are no specific laws or regulations.

The status of each entrepreneur (including Direct Sellers) is defined by Act No. 455/1991 Coll., Small Trade Act.

Denmark
The status of sales people differs from company to company, depending on the set-up of the organisation. In some companies the salespeople are employed, in others they are totally independent. There are no specific legal definitions of the status of salespeople.

European Union
Consult national laws.

Finland
Their status may be that of an independent entrepreneur or an employee. There is no specific status as such.

France
According to the latter, the independent direct salespersons have to register either with the professional register of commerce and trades (if they are distributors) or with the professional register of commercial agents (if they are agents) provided that (cumulative conditions) :

• they have performed as independent salespeople for the last full three (3) years;
• they have reached a minimum benefit higher than 50% of the annual social security threshold (approx. 20 000 Euros) which includes the sum of commercial margins and commissions for distributors or commissions for agents.

Germany
The status of the Direct Seller results in principle from the contractual relation with his Direct Selling company. Although the big majority of direct sellers in Germany are working on an independent basis (commercial agents, franchisees, commission agents, dealers) there are also employed representatives working in Direct Selling Industry.

The following synopsis reveals the differences between non-employees and employees in the field of Labour Law. (Taxes and social security will be commented upon in Section XI)

Labour Law	Non Employees	Employees
Definition	In the main, free to organise his activity, ie – not bound by instructions – independent organisation – free to determine working hours	Cannot organise his activity,ie – bound by instructions – bound by working hours regulation
Consequences	– Industrial Constitution Law not valid No participation of Works Council	– Industrial Constitution Law valid Participation of the Works Council in cases of: – Employment – Working hours regulation – Remuneration matters – Annulment of contract – Relevant organisational changes.
Commercial Code / Dismissals Protection Law	Periods of notice have to be determined in each individual case (without regulation) 1 month from the end of the month. Minimum deadline with one year company seniority: 2 months from the end of month From 5 years upwards: 6 months from the end of month => valid for both parties< = => valid for both parties< = Apart from §§ 84 ff. German Commercial Code there are for independent Direct Sellers ==> Individual Contracts	Periods of notice according to Dismissals Protection Law 1st-6th month DPL not valid 6 months to 5 years company seniority: 6 weeks from the end of quartermonth from 5 years upwards: 3 months from the end of quarter from 8 years upwards: 4 months from the end of quarter => valid for both parties< = from 10 years upwards: 5 months from the end of quarter from 12 years upwards: 6 months from the end of quarter => valid for both parties< = The following regulations of the Labour Law are used for salaried employees: no further legal regulations – Industrial Constitution Law – Working Time Ordinance – Federal Vacation Law – Continuation of Wage Payments Law – Maternity Protection Law – Law relating to the Severely Handicapped – further contents of the Dismissals Protection Law All this leads to the following effects: – Holidays have to be granted – Continuation of wage payment in case of holidays/illness – Minimum wages

Guatemala
No legislation

Hong Kong
No legislation.

Hungary
Some salespeople are employees but most of them are private entrepreneurs / independent or self-employed distributors. Their statuses are also defined by the contract concluded with the direct selling company.

Given the relatively high monthly fix costs to run a business in Hungary (approx. HUF 100,000 or approx. Euros 330 per month minimum) and that the Direct selling companies are not allowed to pay bonuses to private individuals, only those direct sellers formalize their business with an official business license whose monthly revenues (either from direct selling or from any other business venture) surpass this level.

India
Sales people are always under an agreement with the manufacturer / trader whose goods he / she agrees to sell door to door and, therefore, his rights and obligations are governed by the terms and conditions of the agreement. Ordinarily the goods entrusted to him is the property of the manufacturer / trader. The sales people only act as the agent of the manufacturer / trader whose goods they agree to sell.

Indonesia
No legislation.

Ireland
Generally the legal relationship between direct sales companies and the direct seller is one of independent contractor. The criteria for this relationship can be summarised as follows:

• The company has no control over the hours worked and no supervision over the way in which the work is carried out
• There are no benefits normally offered to employees, e.g. pension scheme, paid holiday and sickness leave.
• Expenses, including the provision of equipment and office facilities, incurred in carrying out the work are totally the responsibility of the direct seller.
• Sales and promotional materials are provided at the expense of the direct seller.
• Direct sellers are not subject to the same obligations as employees who are subject to taxation and social security contributions on their earnings at source, whose terms of employment are governed by employment legislation and whose working hours and practices are determined by the company who is their employer.

Italy
The Direct Seller’s role can be described as an activity of commercial intermediation rather than trade. In fact the seller, namely the subject authorized to be the contractual party with the final user, is the Direct Selling Company.

In other words, the sales take place directly between the Company who sells and the final user who buys, whereas the Direct Seller, who acts as an intermediary, only puts the two contracting parties in contact by demonstrating the product on offer, illustrating the terms of the offer and collecting an order proposal from the consumer on behalf of the Company and addressed to latter.

In Italy we have two categories of Direct Sellers namely: part-timers and spare-timers without any obligation to perform are classified as Solicitor Business and full–timers with obligation to perform as Professional Agent. Both are independent salespeople who are not allowed to buy and resell the product and then do not earn on margin but are paid on commission.

The independent salespeople must obtain from the company an “Identification Card” signed by the Executive Officer, showing the personal data and the photo of the individual. The Identification Card is released by the Company after a communication to the Police Department in order to assess the moral requisite of the prospective salesperson and must be renewed or up-dated annually.

At certain level of activity, i.e. when the solicitor’s annual income from this activity exceeds 5.000 euros, the solicitor of business becomes liable to VAT, on the commission earned, and must be enrolled with the VAT office. The value of 5.000 euros is not to be understood as an yearly exemption. When exceeding this limit VAT liability becomes permanent.

If it can be determined that the job foresees the obligation to perform the independent salesperson classified as a professional agent must also be enrolled with the Chamber of Commerce.

Japan
Salespeople engaged in direct selling may be divided into two groups; those with an employment contract with a company and individuals who have a consignment contract with a particular company. An overwhelming number belong to the second group.

Compared with other occupations, the social status of salespeople is not high due to their relatively unstable income and the difficulty in obtaining their customers and peculiar consumers’ troubles, etc.

Lithuania
Independent entrepreneurs.
The direct sellers can choose whether to execute the activity by obtaining business license or by registering individual activity.

The business license can be issued for certain limited period which cannot be shorter than one month and not longer than calendar year. It is issued in the municipal tax office.

The registration of individual activity is valid till the direct seller terminates it himself/herself.

Malaysia
Generally salespersons are independent contractors. They are not employees of the company. However, the authority stipulates that companies are responsible for the conduct of their distributors.

Mexico
Most salespeople are either mercantile commission agents or independent contractors; they are registered as such before the tax authorities and have no employer / employee relationship. They do not receive fixed or variable expenses; they are not bound to work under a schedule; they are not committed to attend meetings or submit reports; there is no restriction on selling the products of different companies (exclusivity clauses); they do not receive instructions or orders. As a result, they have no dependence upon a company, which under the Federal Labor Law, is essential to establish the status of a subordinate worker or agent.

Court precedents have ruled that commission agent agreements may or may not be deemed as to create labor relationships, depending on the type of obligations contained in such agreements.

Also, recent court precedents have established that the fact that an individual proves, in court, that it frequently received payments from a company, does not in itself, demonstrate that such individual is an employee of such company.

Federal Labor Law (“Ley Federal del Trabajo”): http://www.ordenjuridico.gob.mx/ http://www.stps.gob.mx/bp/micrositios/reforma_laboral/ref_lab.html

Netherlands
No official status for direct salespeople.

New Zealand
Direct Sellers in New Zealand have an established position with clear recognition by Government agencies of their independent contractor status. The Inland Revenue has issued a booklet specifically designed for the Direct Selling Industry which clearly defines the differences between an independent contractor and an employee. This booklet (IR 261) is available from any Inland Revenue office and from the DSANZ.

The standing of the independent contractor has been defined in law, specifically through the case of Harcourts versus the Inland Revenue 1992/1993. This case was heard in the High Court and went through the Appeal Court and the Privy Council to be upheld in all three instances. The Inland Revenue, as a result, has declined to pursue the issue with any subsequent cases, having lost so decisively.

The Government has declared that they have a focus on free enterprise and will not introduce any new legislation to counter the current position. Therefore Direct Sellers working as independent contractors are responsible for all their own taxes including GST, Income Tax, Fringe Benefit and Accident Compensation Levy payments.

Direct Selling has a long history in New Zealand with a traditional base in the Door to Door market for a wide range of domestic products running back to the early part of the 20th century. The introduction of the first Multi-level or network marketing companies since the late 1970’s has seen a significant growth in the industry and of the business opportunity. This has had some adverse reactions in some public perceptions for some companies attempting to apply the formula used in the US directly to New Zealand however this has also been offset by some companies using the quality and environmental qualities of their products to heighten their presence and acceptance in the market.

Direct Selling in New Zealand was branded the hidden industry by the 1998 Economic Impact Study conducted by the University of Otago and this still appears largely true in spite of publicity undertaken by the DSA on behalf of the industry.

The DSA is well known to regulatory authorities and therefore members of the DSA are accorded a higher status on the basis that they hold to a higher level of ethics in the market. To this extent consumer advocate organisations and consumer media programmes do mention the DSA in relation to un-ethical behaviours by those Direct Sellers (member or non-member) that come to their attention.

Norway
Direct sellers are defined as independent contractors and are responsible for their own taxes, social charges and VAT.

Peru
No legislation. Several jurisprudence applicable to individual D.S. companies, in litigations from both Social Security Agencies and Direct Sellers (claiming for employee status), are stating independent status.

However, the relationship between companies and direct sellers needs to be carefully structured in order to ensure that direct sellers:

• Do not act under orders from a company,
• Have the freedom to select merchandise to be sold,
• Accept their own business risk.

Philippines
The relationship between the company and its direct sellers must be examined against the criteria laid down in labour jurisprudence in order to determine whether they are to be considered as employees or not.

Under existing labour jurisprudence, the elements of an employer / employee relationship are the following:

1. the selection and engagement of the employee;
2. payment of wages;
3. the power of dismissal;
4. control over the employee with respect to the means and methods by which the work is to be done.

The last mentioned element, which is also known as the ‘right of control’ test, is deemed the most important, the other requisites being sometimes disregarded.

According to the ‘right of control’ test, an employer / employee relationship exists if the person for whom the services are performed has reserved the right to control not only the result of the work but also the ways and means by which it is performed. (The test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right.) If this situation is present, an employer / employee relationship exists, otherwise the sales person shall be considered as an independent contractor.

Poland

Status of Direct Sellers
There are no legal restrictions on the activities of direct sellers. Direct Sellers of operating companies are either independent commission salespersons (commercial agents) or independent distributors (buy / sell dealers).

Portugal
If they are not full employees of the Direct selling company, this is considered a free independent activity, that requires only an individual restriction before the Tax authorities and the social security system.

Russia

• It is highly important that direct selling companies ensure that those who are involved in their schemes are self-employed wholly independent entrepreneurs. Otherwise they will be treated as direct selling companies’ employees – with the inevitable consequence that companies have to meet social security and employment protection law.
• Direct Sellers should register with the tax authorities as a person (Individual Entrepreneur) engaging in an individual business activity. All entrepreneurial activities without registration are subject to sanctions in accordance with the Criminal Code.
• A company’s relationship with its registered and non-registered distributors in Russia will influence the company’s Russian tax withholding obligations with respect to commissions paid to such distributors. Companies are subject to tax withhold and social security payroll obligations with respect to the commissions payable to Russian distributors. In such cases, if they are not registered as individual entrepreneurs, each distributor’s Russian income tax must be withheld from the distributor’s pay and remitted by the payer to the Russian tax authorities.
• Russian direct selling companies are not obligated to report registered distributors’ earnings on a regular basis, but if companies receive inquires from Russian tax authorities, they must provide these authorities with corresponding information concerning the commission paid to the distributor.

Singapore
They can be classified as independent contractors if the contract spells out as such and, in practice, they are treated as such, ie, if there is no direct supervision. However, in as far as their liability vis-à-vis the customer is concerned, they are, unless known to the buyer, agents of the company. The company will be liable to the customer and any consequent liability of the company can be indemnified by the agents through third party proceedings.

Slovak Republic

There is no separate Statute for Direct Sellers in Slovakia.

Slovenia
There are no legal restrictions on the activities of direct sellers. Direct Sellers of operating companies are either independent commission salespersons or independent distributors.

South Africa
The independent contractor is not an employee of the company and the employer may not contract for any specific length of time or manner in which the independent contractor sells the product. The independent contractor does not fall within the benefits offered such as provision of pension fund or medical aid offered by the employer to employees and thus must make his/her own arrangements.

A dominant impressions test is frequently used to determine the nature of the agreement between employer and independent contractor and legislation is becoming stricter with regard to what constitutes an independent contractor.

South Korea
Generally salespersons are independent contractors. They are not employees of the company.

Spain
Independent Status

Dealer (buying / selling)

The dealer must:

• register with the tax authorities;
• register with the social security and pay the monthly contributions;
• present quarterly to the tax authorities income tax returns and VAT if applicable.

The company must:

• file a return to the tax authorities on purchase made by dealers when the value of annual purchases exceeds the sum of 3.005 Euros, VAT included.

Commission Agent

The agent must:

• register with the tax authorities:
• register with the social security authorities and pay monthly contributions;
• present quarterly to the tax authorities income tax returns and VAT;

The company must:

• withhold 21% on commissions paid;
• at the end of the financial year, file a return to the tax authorities on earnings made by employees and commission agents.

Sweden
Salespeople may be employed or independent.

During the 1980s, Tupperware took a case through the courts to establish that their consultants were independent contractors. The final decision, made by the Supreme Court, was that they were not, the main points being:

– the consultant had only one supplier;
– price lists, invoices and other papers bore the name of Tupperware;
– salespeople were identified with the company, eg, “Your Tupperware lady….”
– Tupperware paid the VAT

Since the Tupperware case a special tax status for independent people has been introduced, the so-called F-tax. Tax authorities are however restrictive in granting such status to direct sellers. Normally invoking the arguments of the Tupperware case. The Swedish DSA has a special committee dealing with the matter and some companies are trying pilot cases. The situation is still uncertain and an EU wide clarification on the matter would be welcomed.

Taiwan
Article 10 of MLMSA states

Before a participant takes part in the plan or organization of a multi-level marketing enterprise, the enterprise shall inform the participant of the following particulars, and shall make no concealment, false, or misleading presentations:
1. paid-up capital and gross business volume of the multi-levels sales enterprise;

2. multi-level marketing plan, and conditions of participation;

3. laws and regulations relevant to multi-level marketing;

4. obligations and responsibilities of a participant, and conditions of withdrawal by a participant from the organization or plan, and rights and obligations arising from the withdrawal;

5. matters relevant to the goods or services;

6. the calculation methods, criterion, and reasons, when multi-levels sale enterprises deduct the devaluation amount from the price in repurchasing the goods or services pursuant to the later sentence of Articles 21.3 or 24 of the Act;

7. such other matters as may be required by the competent authority.

When a participant introduces another person to participate in the organization or plan, such participant shall make no false or misleading presentations on items listed in the preceding paragraph

Article 11 of MLMSA states

When recruiting participants by advertising or other means, a multi-level marketing enterprise shall make it clearly known that it is engaged in multi-level marketing activities; neither may it recruit participants under the disguise of recruiting employees or on other pretense.

Article 12 of MLMSA states

When promoting or selling goods or services or recruiting participants by means of declared cases of success, a multi-level marketing enterprise or its participants shall concretely explain the time periods, benefits obtained, and course of development of such cases, and may not make false or misleading representations.

Article 13 of MLMSA states

A multi-level marketing enterprise shall enter into a participation contract in writings with that who intends to participate in the plan or organization, and the multi-level marketing enterprise shall give the participant an original participation contract.

The writings referred to in the preceding paragraph may not be in the form of an electronic document.

Thailand
There are two definition of direct sellers in Direct Sales and Direct Marketing Act as below:- “Independent distributor” refers to a person who receives the right of ownership of the goods or services from the direct sales operator, and directly offers such goods or services to the consumer. “Direct sales representative” refers to a person who is authorized by the direct sales operator to directly offer goods or services to the consumer.

Turkey
Direct sellers are mostly independent but there are also direct selling companies with a number of employees.

Ukraine
According to Civil Code Direct sellers shall be registered as private entrepreneurs.

United Kingdom
The status of a direct seller depends on the contract terms under which he is engaged.
In the case of most UK DSA member companies, each direct seller is:

• Not an agent of the direct selling company;
• A principal (i.e. retailer) who buys products from the direct selling company and sells them to consumers;
• Not an employee but in business on his/her own account.

Usually a direct seller’s agreement has been carefully drawn so as to achieve these outcomes: see the DSA’s model direct seller agreement.
It follows from (i) and (ii) that when a consumer places an order with a direct seller, the consumer makes a contract with the direct seller (and not with the company).
It follows from (iii) that the direct seller is himself/herself responsible for informing the tax and national insurance authorities about his/her income.
If, on the other hand, the seller is an agent of the company, both the company and the agent will be subject to the Commercial Agents Regulations 1993, with the result that upon termination of the direct seller’s agreement, the direct seller may be entitled to compensation.

United States
26 USC § 3508 of the Internal Revenue Service Code provides that direct sellers are non-employees for federal employment tax purposes if they:

• Are engaged in the trade or business of selling (or soliciting the sale of) consumer products to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis which the Secretary prescribes by regulations, for resale (by the buyer or any other person) in the home or otherwise than in a permanent retail establishment,
• Are engaged in the trade or business of selling (or soliciting the sale of) consumer products in the home or otherwise than in a permanent retail establishment, or
• Are engaged in the trade or business of the delivering or distribution of newspapers or shopping news (including any services directly related to such trade or business),
• Substantially all the remuneration (whether or not paid in cash) for the performance of the services described in subparagraph (A) is directly related to sales or other output (including the performance of services) rather than to the number of hours worked, and

The services performed by the person are performed pursuant to a written contract between such person and the person for whom the services are performed and such contract provides that the person will not be treated as an employee with respect to such services for Federal tax purposes.

Failure to meet this three-part test does not necessarily mean that direct sellers will be treated as employees for federal tax purposes by the Internal Revenue Service (IRS). Section 530 of the 1978 Revenue Act, contains an on-going moratorium which prevents the IRS from retroactively reclassifying direct sellers as employees as long as their independent contractor treatment is reasonably based.

Even if a direct seller failed to meet the tests provided in the 1978 Revenue Act, the determination of employee or independent contractor status could still result in a favorable outcome under state common law. Thirty-eight (38) states now have an exemption identical or similar to the federal exemption language in their state unemployment codes. (Some states also have direct seller employment exemptions for workers compensation purposes.) The remaining states are relatively evenly divided between an economic realities test (commonly known as an ABC test, consisting of a combination of three independent factors) and the common law test (which basically emphasizes control).

The nature of direct sellers as ‘outside salespeople’ also generally exempts them from coverage under the wage / hour provisions of the Fair Labor Standards Act.

Uruguay
Under Article 2 of Law 14625 of 4 January 1977 it is assumed that manufacturers and importers distribute their own products. They are thereby subject to the requirements of Social Security and taxation as set out in the special regulations governing each of these subjects. The same provision also applies to requirements under industrial accident insurance.

Article 4 of the same law excludes independent salespeople from its provisions. To qualify as such they must fulfill the following requirements:

1. They receive no instructions from the manufacturer or distributor regarding methods of selling, conditions and selling price of the items they sell.
2. They sell the merchandise directly to the customer.
3. They assume all risks of sale.

Independent direct selling (ie, without any employee relationship between salesperson and company) may be effected by an individual or by a company and may take the following forms:

1. Retail Merchant (the most common form) – a person who makes the sale by acquiring and reselling the merchandise being remunerated by the difference between the sale price (usually recommended by the manufacturer) and the price paid for the goods. They trade on their own account as individually or corporately.
2. Commission Merchant – a person who sells as intermediary between the purchaser and the manufacturer, being remunerated by commission based on percentage of the sale price. Persons effecting the sale can act in the name or as representative of the manufacturer (which makes them agents) or act on their own behalf (which makes them commission merchants)