In 2018, as part of the four-year review of the Real Estate Industry Award, the Fair Work Commission introduced an annual performance review for any agent engaged as a commission-only employee. This performance review is in addition to a tight set of qualifying criteria that exists for employees to be initially engaged on a commission-only basis.
Commission-only employees engaged on or before 2 April 2018 are due for their first mandatory performance review on 1 April 2019.
For those engaged as a commission-only employee after 2 April 2018 their first mandatory review will be 12 months after the date of their commencement.
Changes will affect your employees
“These changes imposed an obligation on employers to annually review their commission-only salespeople to ensure they remain qualified to be on commission-only,” says Bryan Wilcox, CEO of the Real Estate Employers’ Federation (REEF).
“If they have not earned the Minimum Income Threshold Amount (MITA) of $54,578 in the previous 12 months they can no longer be paid as a commission-only salesperson,” he says.
The MITA is the amount of gross commission (before tax and excluding superannuation) a commission-only employee must earn from the sale of property in the previous 12 months to enable them to remain commission-only. Importantly, the calculation of the MITA cannot be pro-rated for part-time employees or for any other reason.
Review fast approaching
Wilcox says the first review date is fast approaching and employers must complete a reconciliation of monies paid to their commission-only salespeople. If an employee falls short of the MITA, it will be unlawful for an employer to retain them on commission-only.
“However, unless the employer has undertaken a performance management process, the employment of a commission-only employee will not automatically cease because they have failed to satisfy the MITA review,” he says. “Employers will simply have to start paying the employee the Award entitlements. Furthermore, the new arrangements may or may not include an additional entitlement to commission.”
Wilcox does, however, caution that “a failure to undertake a performance management process prior to terminating any member of staff, including poor performing commission-only salespeople, may expose the employer to a claim of unfair dismissal or general protections”.
If you have a situation in which a commission-only employee’s gross income has, or is likely to, fall below the MITA, you can contact REEF for advice and support.
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REEF is the real estate industry’s leading not-for-profit employer and workplace relations advisory association. It has more than 1650 members and subscribers across Australia. Each year, REEF receives more than 15,000 calls from real estate employers needing help and guidance on matters affecting the employment relationship.