Drastic changes for Real Estate employment

James Houghton | Senior Employment Adviser | Employsure
Drastic changes for Real Estate employment

Significant changes to the Real Estate Industry Award will come into force from 2 April 2018. The changes are set to impact over 80,000 employees, most of which are employed by small employers – those with four or fewer staff.

With the substantive changes now finalised by the Fair Work Commission, Senior Employment Adviser from Employsure James Houghton said:

“With the introduction of the new Real Estate Industry Award there’s a lot of new information for real estate employers to take in, a lot to understand and a lot to implement by 2 April 2018.”

Charlie Chedid from Chedid Property in Mosman commented:

“The changes are fair, but it’s the time required to implement, that can get challenging for employers.”

James encourages every real estate employer “to be across of the changes and understand what they need to do before the new Award kicks in. We’ve notified Real Estate employers in our network of the changes and are helping them get prepared for the complex process of change.”

The most significant changes are outlined below:

Classification and structure

Rather than classifying employees by way of reference to job title, moving forward, the FWC determined that it was more appropriate to set levels by way of reference to an employee’s level of skills and responsibility.

According to James, the new system was introduced “to make the task of classification easier for both employers and employees alike.” To ensure compliance, “businesses should review the skills and responsibilities of existing employees to ensure that their classifications are appropriate in light of the upcoming changes.”

However, the new job classifications according to Charlie could be problematic for small boutique real estate businesses when staff “often wear many hats - such as prospecting, marketing, admin, and sales support.”

Increase to Minimum Award Wages

The first full pay period commencing on or after 2 April 2018 will see changes to the minimum rates of pay for most employees.

The Award rates of pay for Real Estate employees will be increased in line with the table below:

Employee Classification

New weekly minimum wage

Real Estate Employee Level 1 (Associate Level) –  first 12 months

$728.20

Real Estate Employee Level 1 (Associate Level) – after 12 months

$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

“If you are currently paying beneath the rates contained in the above table, then you are required to adjust the employee’s rate to the new minimum from 2 April 2018. Failure to do so by that time would result in underpayment” according to James from Employsure.

New Minimum Income Threshold Amount

Arrangements will continue which allow certain real estate salespeople to be engaged on a commission-only basis, but with some important changes. Post 2 April 2018, an employer will only lawfully be able to engage an employee on a commission only basis, once they have established that the employee has satisfied various eligibility tests and, in particular, the Minimum Income Threshold Amount (MITA).

To satisfy the MITA an employee must show, in any consecutive 12-month period in the preceding three years, that they received a salary (inclusive of commissions but excluding statutory allowances and superannuation) equal to 125% of the minimum Award rate for the relevant classification. 

Commission Only Review and Cancellation

In addition, the FWC decided to introduce an annual review for employees engaged on a commission only basis.  An employer is now obliged to assess a commission only employee’s remuneration every 12 months. If it is demonstrated that the gross income falls below the Minimum Income Threshold Amount, the employee can no longer continue to be lawfully employed on a commission-only basis. “Should an employee fail to satisfy the above criteria, they must revert to a salaried position in accordance with the wages prescribed in the Award” James advises.

No “all up” commission rate for commission-only employees

The “all-up” commission rate in commission-only arrangements have been deemed unlawful and inconsistent with the National Employment Standards (NES). “This means that commission-only employees must be paid their National Employment Standards (NES) entitlements such as annual leave and sick leave at the time the entitlement is taken.”

Allowances

In addition to these changes, new allowances have been incorporated into the Award. These relate to:

  • new criteria in regard to the reimbursement of an employee for the use of their own mobile phone, and
  • the introduction of a new allowance to reimburse employees who use their own motorbike in the course of their employment

Overall, Charlie says real estate employers should welcome the change but admits “The Government needs to do more to support small businesses particularly in a sector that is boosting the Australian economy by leaps and bounds.”

James reminds employers to “understand and consider the impacts of these changes and plan accordingly before 2 April 2018.”

www.employsure.com.au