The Fair Work Act 2009 requires the Fair Work Commission to undertake a review of all modern pay awards as soon as possible after the four-year anniversary of commencing operation (which was 1 January 2010). The purpose of the review is to make sure the award continues to be a fair and relevant set of terms and conditions for employment.
Following discussions, there were a number of matters that REEF (and other employer parties) could not reach agreement upon with the unions. The Fair Work Commission was asked to rule on these matters.
1. Increase to minimum award wages
The Fair Work Commission decided there will be an increase of $72.40 per week to the minimum rate of pay for a Property Sales Representative (real estate salesperson). Taking into account the recent 2017 National Wage Case decision, the minimum weekly rate of pay for a Property Sales Representative will increase to $809.10 (from $736.70).
The commencement date for the increase is expected to be 1 January 2018, although the Fair Work Commission hasn’t decided whether it will take effect in full on this date or be phased in over a period of time.
There will also be variations in the base rates of pay for other classifications under the award, including Property Sales Associates, Property Managers, Strata Managers, and Supervisors. The Fair Work Commission is yet to make a final decision about these variations and the date of their commencement.
2. Commission-only arrangements
a. Minimum Income Threshold to increase
The Minimum Income Threshold is an amount used to determine whether a salesperson qualifies to be engaged on a commission-only basis.
The Minimum Income Threshold is currently 110 per cent of the minimum wage for the employee’s award classification. The Fair Work Commission has expressed a “provisional view” that the threshold will increase to 125 per cent of the rate for the employee’s award classification.
In the event that the Property Sales Representative rate moves to $809.10 on 1 January 2018, and assuming the Fair Work Commission’s provisional review is affirmed, the Minimum Income Threshold will be satisfied only if the employee has earned at least $52,734 in a 12-month period during the last three years.
The other criteria required to qualify for commission-only employment remain unchanged. These include:
- The employee must be engaged as either a Property Sales Representative or a Property Sales Supervisor under the award. The employee cannot be engaged as a casual, a junior, a Property Sales Associate or a trainee.
- The employee must agree in writing to be remunerated on a commission-only basis, and have a written agreement that sets out the basis upon which commission is to be calculated.
- The employee must have either a real estate agent’s license or be registered or permitted to perform the duties of a real estate salesperson under real estate law.
- The employee must have been employed as a Property Sales Representative or a Property Sales Supervisor for an aggregate period of at least 12 months in the five years prior to entering into the commission-only arrangement.
- The employee must be at least 21 years of age.
b. No wage safety net for commission-only employees
The Australian Property Services Association (APSA) – the national real estate union – wanted commission-only arrangements to be underpinned by a wage safety net. This would have meant that if, over a defined period, the commission-only employee didn’t earn the equivalent of the minimum award wage, the employer would be required to pay the employee the difference between the award wage and the commission earnings. The Fair Work Commission rejected APSA’s proposal.
However, the Commission did decide to introduce a commission-only ‘review and cancellation’ type provision. This provision means that employers will need to review annually the gross income of a commission-only employee and, where that income falls below the Minimum Income Threshold, the employee cannot continue to be employed on a commission-only basis. Importantly, however, there is no top-up payment required at the time the commission-only employment ceases.
The Fair Work Commission also expressed a preliminary view that the Minimum Income Threshold cannot be pro-rated for part-time employees.
c. Definition of minimum commission-only rate
The new minimum commission-only rate definition will be changed to read “31.5% of the Employer’s Gross Commission”, rather than the current “35% of the Employer’s Net Commission”.
3. Debit-credit commission restrictions
The unions wanted to place significant restrictions on the types of items that could be debited under a ‘debit–credit’ commission arrangement. The unions’ claim in this regard was rejected by the Fair Work Commission. Aside from the increase in base rates of pay, ‘debit-credit’ can continue as it currently applies.
4. ‘All-up’ commission rate for commission-only employees
The Fair Work Commission confirmed that where a commission-only employee is currently employed on an all-up arrangement, the employee is entitled to be paid their National Employment Standards (NES) entitlements (such as annual leave) when the leave is actually taken, rather than in advance as part of the commission payment.
Other outcomes
There were a number of other minor and uncontested matters which will be included in the new award. These include a change in the telephone allowance, changes to the entitlement to post-employment commissions, the introduction of a motorcycle allowance and the abolition of debit transfers where an employee moves from debit-credit to commission-only.
It is important to note that, except in relation to the all-up commission-only rate issue, the Fair Work Commission’s proposed changes to the award are not yet operative and will commence 1 January 2018 at the earliest.
The Real Estate Employers’ Federation (REEF) is the real estate industry’s leading not-for-profit employer and workplace relations advisory association. It has 1,500 members and subscribers across the eastern states of Australia. Each year, REEF receives more than 12,000 calls from real estate employers needing help and guidance on matters affecting the employment relationship.
For more information about joining REEF, go to www.reef.org.au or call 1300 616 170.
