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NEW PAY SCALE FOR REAL ESTATE AGENTS PAID COMMISSION–ONLYLast month the Australian Fair Pay Commission (‘AFPC’) handed down a wage decision announcing a new piece rate Australian Pay and Classification Scale for commission-only real estate salespersons known as the Real Estate Agents’ (Commission Only) Australian Pay and Classification Scale (‘New Pay Scale’).
The New Pay Scale applies to employees who are:
In addition, the New Pay Scale is only available to employees who:
The AFPC put these measures in place acknowledging that a commission-only arrangement may be unreasonably used by some employers and to protect the remuneration of inexperienced recruits.
The New Pay Scale is only available as an option to employees who fit the criteria set out above. Otherwise, Queensland employees that were:
Minimum Commission under the New Pay Scale
An employee employed as a Property Sales Person on a commission-only basis from 1 October 2007 must have the arrangement confirmed in writing and is entitled to receive a minimum of 35% of the employer’s ‘net commission’.
The employer’s ‘net commission’ is to be calculated as the gross commission paid to the employer from a vendor as a result of a sale less:
The employee is then entitled to receive a minimum of 35% of the remainder as their share of the commission. The minimum wages guarantee under the Workplace Relations Act 1996 still applies to Commission–only arrangements. Therefore, if an employee on commission-only does not receive sufficient commission averaged over a 12 month period to meet the minimum periodic rate of pay in the Pay Scale to the NAPSA (i.e. $522.12 gross per week from 1 October 1007), the employer is required to make up the difference. In addition to this, the employee is entitled to the other minimum guarantees in the Australian Fair Pay and Conditions Standard (‘Standard’) in relation to annual leave, personal leave, parental leave and public holidays. What about employees on Registered Agreements? Prior to the Workplace Reforms on 27 March 2006, real estate agents in Queensland were covered by the Property Sales Award Queensland – State 2005 (‘State Award’). The State Award provided for employers and employees to opt-out of the State Award to the extent that an employee may be remunerated by commission-only if an agreement was made between the parties and registered with the Queensland Property Industry Registry (‘QPIR’) (‘Registered Agreement’).
Registered Agreements in place under the State Award as at 26 March 2006 continue in force after this date as Preserved State Agreements. As a consequence of the Workplace Reforms and the recent decision of the AFPC, these Preserved State Agreements remain valid to the extent of pay and other conditions, provided all commission-only Property Sales People receive as a minimum 4 weeks paid annual leave, 10 days paid personal leave, compassionate leave, public holidays and the parental leave provisions in the Standard from 27 March 2006
Although Registered Agreements made prior to 26 March 2006 are preserved, employees have not been able to make these agreements and ‘opt out’ of basic hourly rates in the Pay Scale since 27 March 2006.
Under the State Award these agreements cease to operate 3 years from their operative date. Once they expire, employees and employers will not be able to re-register them or enter into new agreements of this type. The employee will then have to enter into a written arrangement with the employer for commission-only payments under the New Pay Scale so long as they meet the relevant criteria.
Preserved State Agreements may be replaced by an Australian Workplace Agreement or a Collective Workplace Agreement, provided the Fairness Test is met.
Calculating payments for Annual Leave and Personal Leave
Employees that are paid on a commission-only basis are classed as piece-rate employees. The Workplace Relations Regulations 1996 (‘Regulations’) prescribe the manner in which annual leave and personal leave entitlements are calculated for employees engaged on piece rates. The leave entitlements are paid on an hourly basis and the rate of pay is calculated using the ‘basic periodic rate of pay’ for the relevant employee. The basic periodic rate is calculated by adding the total amount earned by the employee either in the 12 month period immediately before taking the leave, or if employed for less than 12 months, the time the employee has worked. This is then divided by the total number of hours worked by the employee during the relevant period.
The formula is expressed in the Regulations as:
Where: BPR = basic periodic rate of pay
TA = total amount earned
TH = total number of hours worked
By using this formula an hourly rate will be calculated. This hourly rate is paid to the employee for the number of hours leave taken, provided they have sufficient leave accrued.
Salespeople not employed by a Corporation
Employees employed by a sole trader, partnership or trust without a corporate trustee continue to come within the State industrial relations system. Accordingly, the State Award continues to apply to their employment. The wage decision of the AFPC referred to above does not affect their terms and conditions of employment. The applicable wage rate will be taken from the State Award and not from the Pay Scale in the NAPSA and State wage decisions will apply to those wage rates. These employees will continue to have the ability to enter into Registered Agreements but do not have access to the provisions of the New Pay Scale or to workplace agreements under the Federal Workplace Relations Act 1996.
Main implications for Employers
If you have any questions in relation to this Employment Update please contact Aitken Legal. |
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