The need for real estate employers to adjust minimum rates of pay at the start of each financial year for employees covered by the Real Estate Industry Award or the Clerks – Private Sector Award is nothing new. But this year, because of the outcome of the four-year review of the Real Estate Industry Award, employers have had to make pay adjustments twice in three months.
Throw in the new broad-band classification structure, which sees employers having to reclassify employees and pay them accordingly, and there’s definitely room for confusion.
Let’s start by having a look at the new broad-band classification structure.
In the past, classifying employees was awkward when mixed job functions were involved, particularly because different rates of pay applied to different titles. This problem has been solved with the introduction of a new broad-band classification structure.
There’s now a four-tiered classification based on the employee’s skills, duties and responsibilities:
- Real Estate Employee Level 1 (Associate Level)
If an employee is engaged to assist a salesperson, property manager or strata manager, they should be classified at the Associate Level (for example, a property sales associate).
- Real Estate Employee Level 2 (Representative Level)
If an employee is engaged to perform the duties of a real estate salesperson, property manager or strata manager, they should be classified at the Representative Level.
- Real Estate Employee Level 3 (Supervisory Level)
If an employee is engaged to supervise Level 2 employees, they’ll be classified at the Supervisory Level (for example, a sales manager).
- Real Estate Employee Level 4 (In-Charge Level)
If an employee is engaged to be responsible for ensuring the business complies with its obligations under real estate law, they’ll be classified at the In-Charge Level (for example, a licensee-in-charge).
Every operational employee must be placed into one of these levels.
It no longer matters if an employee performs a mix of duties across sales, property management or strata management. Employees are simply classified at a particular level.
Rates of pay
The start of the new Real Estate Industry Award on 2 April 2018 meant employers were required to implement new minimum rates of pay for their employees falling under this award. These increases were substantial and in some cases in excess of 10 per cent for some employee classifications.
Then, following the Fair Work Commission’s annual wage review, employers were required to make a further 3.5 per cent increase to minimum rates of pay for their employees from the first full pay period on or after 1 July 2018.
Here’s an example of the impact of these increases for an adult full-time Level 2 real estate salesperson.
REEF publishes a Rates of Pay booklet (see below) each year to help employers. It sets out a comprehensive schedule of minimum rates of pay for all classifications (including adult and junior) applicable to our industry and includes rates of pay for full-time, part-time and casual employees.
Absorbing the annual wage increase
But what if you’re already paying an employee more than the award minimum? Can the wage increase simply be absorbed into those above award payments? The short answer is ‘yes’.
Both the Real Estate Industry Award and the Clerks – Private Sector Award contain a provision stating that “the monetary obligations imposed on employers by this award may be absorbed into over award payments.” Further, nothing in the awards “requires an employer to maintain or increase any over award payment.”
This applies when an employer is not otherwise obliged to maintain over award payments. An obligation could apply because of the terms of an employee’s employment contract (though this is not common in the real estate industry).
In the case of an employee who is not covered by an award (which is also uncommon in our industry), any increase in an employee’s salary would usually be at the employer’s discretion, unless there is a term in the employment contract that prescribes an increase.