On 2 April 2018, amendments to the Real Estate Industry Award 2010 (Award) came into force which affects the entry into and continuation of commission-only employment arrangements.
To be eligible for commission only employment, an employee must be Real Estate Employee Level 2 or higher.
A casual employee is not eligible for commission only employment.
The objective of commission only employment is to enable a salesperson who meet minimum requirements under the Award the ability to earn 125% or more of the annualised minimum wage under the Award.
A person may only enter into an agreement to be a commission-only employee when all of the following conditions have been satisfied:
- Written agreement – the employee and the employer have entered into a written agreement which provides that the employee will be remunerated on a commission-only basis setting out the basis upon which the entitlement to commission will be calculated;
- Real estate salesperson – the employee has been issued with a real estate licence or is registered or permitted to perform the duties of a real estate sales person under real estate law;
- Level 2 or higher – the employee has been engaged 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 a commission-only agreement;
- 21 years of age or older – the employee is 21 years or over;
- Not a casual, junior or lower level – the employee is not engaged as a casual, a junior (under 21 years of age), a Real Estate Employee Level 1 or a trainee; and
- Minimum Income Threshold Amount (MITA) – the employee has achieved the Minimum Income Threshold Amount.
An employee who was qualified to be a commission only employee before 2 April 2048 will continue to be eligible provided they continue to meet the MITA.
MITA is achieved if the employee can establish that in any consecutive 12 month period in the 3 years immediately prior to entering into the commission-only based employment agreement, the employee received an annual remuneration (including commission and/or bonus payments) at least equal to 125% of the employee’s minimum salary under the Award excluding statutory superannuation.
As at the date of this article, the MITA thresholds are:
|Threshold (Award + 25%)|
Review pre-existing commission-only employment
The recent amendments to the Award require employers to review all commission-only employment arrangements entered into prior to 2 April 2018. The review must occur no later than 12 months from 2 April 2018.
The purpose of the review is to determine if the employee meets the MITA.
If the MITA has been met, the commission-only employment arrangement may continue and is subject to annual review to ensure that it continues to meet the MITA.
If the MITA has not been met, the commission-only employment arrangement must cease.
Upon the cessation of the commission-only employment arrangement, the 3 year period for the purposes of assessing whether the employee has achieved the MITA resets and commences from the date the employee ceased to be a commission-only employee.
Considering the significant impact of these amendments, prioritising reviews of all current commission-only basis employment arrangements prior to 2 April 2019 is a must for all employers in the Real Estate Industry.
If you are a member of the Real Estate industry and are unsure about what these amendments mean for you or require assistance in reviewing any commission-based employment arrangements, we recommend you contact us.