Real Estate Industry Award Amendment Summary
Wednesday, May 02, 2018
Following a recent Fair Work Commission review, several important changes to the Real Estate Industry Award* have been implemented, operative since 2 April 2018. The important changes concern the following areas:
- Employee classifications and their respective minimum wages
- Requirements of commission-only employment
- Payment for listings upon cessation of employment
- Motorcycle and mobile phone allowances
Employee classifications and their respective minimum wages
The previous classification of employees was deemed to be unnecessarily complex, and has been amalgamated into four levels of employees:
- Level 1 (associate);
- Level 2 (representative);
- Level 3 (supervisory) and;
- Level 4 (in-charge).
Each level has a corresponding minimum weekly wage, ranging from $728.20 to $930.50. The award ensures that these new minimum wages cannot result in a wage reduction from existing rates for any employee.
Requirements of Commission-Only Employment
The requirements for commission-only employment have been adjusted in an attempt to ensure that employment terms and conditions are ‘fairer’ for employees.
Commission-only employment can continue only where the employee has achieved a minimum income threshold amount (MITA) over the previous 12 months. An employee’s MITA is calculated as 125% of the minimum wage of his or her classification level. Employers must review employees’ earnings annually to assess whether or not a MITA has been achieved. The award requires that any employment contracts already in existence prior to April 2 be reviewed no later than 2 April 2019.
In the event that an employee fails to achieve their MITA in any 12 month period, the commission-only employment must end immediately, and be replaced by the minimum salary. Employees will not be entitled to back pay of the shortfall.
Commission-only employment is also subject to these further requirements:
- A written agreement between the employer and employee detailing the terms of remuneration
- The employee is a licensed real estate agent
- The employee has been active as a Level 2 employee as a licensed agent for at least 12 consecutive months within the previous 3 years
- The employee is at least 21 years of age
- The employee is not engaged as casual, junior, Level 1 employee or trainee
Another important change is to the minimum commission-only rate, which has been modified from 35% of the employer’s net commission to 31.5% of the employer’s gross commission.
Commission-only employees are now entitled to paid leave in accordance with the National Employment Standards at the time the leave is taken. This pay must be at least the equivalent of the employee’s minimum wage.
Payment for listings upon cessation of employment
Following cessation of employment, employees are now entitled to a portion of any commission, incentive payments and bonuses where there is a legally enforceable contract for sale prior to the expiration of the employee’s exclusive agency period. This differs to the previous award where the legally enforceable contract for sale had to exist at the time of cessation.
Motorcycle and Mobile Phone Allowances
Employees are now entitled to an allowance for the use of motorcycles and mobile phones in the course of employment. For motorcycles, employees are entitled to $0.26 per kilometre with a weekly maximum of 400 kilometres, provided that adequate records of motorcycle usage are kept. The allowance for mobile phones varies on the use of a plan or prepaid.
While the Fair Work Commission’s amendments to the Award will produce more clarity in employee classification and fairer employment terms for employees in commission-only contracts, employees and employers alike must take extra caution in drafting their contracts to ensure they adhere to the more stringent requirements. Your existing employment/contractor structures and pro forma material may need to be reviewed to ensure compliance.
If you need advice on a new or existing contracts, structures, material or you would like any advice, contact us today!