The Fair Work Commission has made a decision that will affect the real estate industry.

Real Estate Industry Award changes you need to know about

The Real Estate Industry Award is under review and the Fair Work Commission has made a decision, with changes that came into effect 2 April, 2018. Here’s what you need to know.

Under the Fair Work Act 2009 (Cth) the Fair Work Commission is required to review all modern awards every four years.  For this reason, the Commission is currently reviewing the Real Estate Industry Award 2010 in consultation with industry representatives such as Real Estate Salespersons’ Association, Australian Property Services Association Queensland, Real Estate Employers’ Association and Real Estate Employers’ Federation.

Although this review is ongoing and yet to be finalised, on 17 January 2018 the Commission made a decision addressing the following issues, which came into effect on 2 April 2018:

  • employee classification and minimum wage;
  • commission-only employee arrangements;
  • entitlements to commission, incentive payments or bonuses after employment ends; and
  • allowances


Employee classification and the minimum weekly wage

From 2 April 2018, employee classifications and minimum weekly wages under the Award changed as follows:

  • Employee classifications and related definitions under the current Award will be amalgamated as follows:
Old classification New amalgamated classification
Property Sales Associate

Property Management Associate

Strata Community Title Management Associate

Real Estate Employee Level 1 (Associate)
Property Sales Representative

Property Management Representative

Strata/Community Title Representative

Real Estate Employee Level 2 (Representative Level)
Property Sales Supervisor

Property Management Supervisor

Strata/Community Title Supervisor

Real Estate Employee Level 3 (Supervisory Level)
  • A new classification called ‘Real Estate Employee Level 4 (In-Charge Level)’ will be added to the Award which will apply to individuals who are responsible for the overall supervision of an office rather than a team.
  • Minimum weekly wage rates based on these new employee classifications will be as follows:
Employee classification Minimum weekly rate
Real Estate Employee Level 1 (Associate)

(First 12 months of employment at this level)

$728.20
Real Estate Employee Level 1 (Associate)

(After 12 months employment at this level)

$768.60
Real Estate Employee Level 2 (Representative Level) $809.10
Real Estate Employee Level 3 (Supervisory Level) $890.00
Real Estate Employee Level 4 (In-Charge Level) $930.50
  • Any current employee (such as an employee classified as a Property Management Supervisor or Strata/Community Title Management Supervisor) must not suffer a reduction in wages as a result of the new classification structure and minimum weekly wage rates. This means no wage reductions for existing employees.

Commission-only employment

In addition to the changes made to employee classifications and the minimum weekly wage, new provisions regarding commission-only employees will also apply.

From 2 April 2018, a salesperson may only to be engaged in commission-only employment if they have achieved a minimum income threshold amount of 125% or more of the equivalent annualised minimum wage applicable to their employee classification.  E.g.  A person who would ordinarily be classified as a ‘Real Estate Employee Level 2 (Representative Level)’ under the Award must achieve annual remuneration of $52,591.50 or more (being 125% of the minimum annual wage applicable for this employee classification) to remain in commission-only employment.

Employers will be required to review the gross annual income of commission-only employees every 12 months to establish that they meet the minimum income threshold amount of 125% of the applicable minimum wage.  For employees on commission only arrangements entered into prior to 2 April 2018, this review should have occurred no later than 2 April 2019.

If the commission only employee’s gross annual income has fallen below the minimum income threshold amount, the commission-only arrangement must cease immediately, and that employee will then be paid the minimum weekly rate in accordance with their relevant employee classification.

Commission-only employees will also be entitled from 2 April 2018 to paid leave in accordance with the National Employment Standards at the time such leave is taken and at no less than their base rate of pay.

Further, the calculation under the Award of the commission-only employee’s minimum commission-only rate will change from 35% of the employer’s net commission to 31.5% of the employer’s gross commission.

The Award will also place the following minimum requirements for commission-only employment:

  • the employee and employer must have a written agreement, as provided for under the Award, that the employee will be remunerated on a commission-only basis and setting out the basis upon which commission will be calculated;
  • the employee has been issued with a real estate license or is registered or permitted to perform the duties of a real estate salesperson under real estate law;
  • the person has been engaged in property sales or commercial, industrial or retail leasing as ‘Real Estate Employee Level 2’, or was an active licensed real estate agent for at least 12 consecutive months in the 3 years immediately prior to entering into the a commission-only agreement;
  • the employee is at least 21 years of age; and
  • the employee is not engaged as a casual, junior, ‘Real Estate Employee Level 1’, or trainee.

Existing employees who qualified to be employed on a commission-only basis under the Award prior to 2 April 2018 will continue to be eligible for commission-only employment under the terms of the Award so long as their employment continues, and subject to continuing to meet the minimum income threshold amount.

Ending employment

From 2 April 2018, except in cases of serious misconduct, following cessation of an employee’s employment an employer is required to pay the employee with a portion of commission, incentive payments or bonuses calculated in accordance with a written agreement or the Award where there was a legally enforceable contract in place for the sale or lease of the property prior to the expiration date of the exclusive agency.  This differs from the position under the current Award which requires a legally enforceable contract to be in place before cessation of employment.

Allowances

If an employer requires an employee to use their own motor scooter or motor cycle during the course of their employment, from 2 April 2018 the employee will now be entitled to an allowance calculated at the rate of $0.26 per km for such use capped at 400km per week.  To claim this allowance employees must keep records similar to those required for the motor vehicle allowance.

Also, employees will be entitled to claim a mobile phone allowance from employers if they are required to use their mobile phone in the course of their employment.

Next steps

Given the broad nature of the Commission’s decision and its impact on both employees and employers, we strongly recommend that all members familiarise themselves with the changes made to the Award by attending our information sessions led by Carter Newell on 30 May 2018 to ensure they are prepared and compliant.

This session is FREE for REIQ individual members and $40 (inc GST) for all other attendees. Book here.