6 November A critical lesson in calculating commission November 6, 2018 By Reef Admin Commission only employment 0 A recent member enquiry highlights how easy it is to make mistakes when it comes calculating the commission to be paid to a commission-only employee. The employee alleged that she was underpaid commission on several sales. She based her allegation on the terms of her commission agreement, as well as provisions of the Real Estate Industry Award. The employee’s Employment Agreement included REEF’s template commission table: Base commission Base commission superannuation Commission margin credit TOTAL 31.5% 2.9925% 15.5075% 50% The commission agreement also set out various amounts that formed debits against the amount credited under the Commission Margin Credit column. These debits included things like annual leave paid to the employee, the costs of the employee’s personal assistant and non-recoverable vendor paid advertising. So far, so good. But it all started to go wrong when the employer forgot that the Base Commission and Base Commission Superannuation amounts are untouchable and it’s unlawful to debit any amounts against them. In this case, the authorised debits were simply taken from the total amount of commission credited to the salesperson (that is, from the 50% total), rather than being debited only from the Commission Margin Credit amount of 15.5075%. This mistake resulted in the employee receiving less than the minimum commission percentage prescribed by the award (31.5%) for two of her sales transactions. In simple term, the employee was underpaid. The takeaway A commission-only employee must receive a minimum of 34.4925% of the employer’s gross commission (including superannuation) from each component of a property sale for which they are responsible. This minimum amount is untouchable. Any agreed debits can only be made from the commission margin above this minimum percentage. Updated template agreements REEF has updated the two template Employment Agreements relating to commission-only employees to more clearly show how the base commission calculation (and superannuation) is protected and untouchable. This has been done, in part, by combining the first two columns into a single column called ‘Guaranteed Base Commission (inclusive of superannuation)’. To access these updated templates, login to the People Management System. Call REEF If you have questions about calculating commission for your commission-only employees, call the REEF Helpline on 1300 616 170. Our team of experienced Workplace Relations Advisors is on hand to help. Related Fair Work Commission hands down Award review decision The wait is over! The Fair Work Commission has handed down its decision regarding the statutory review of the Real Estate Industry Award. Here are the details. Why is the 'all-up' commission rate unlawful? With the start of the new Real Estate Industry Award, commission-only arrangements providing for pre-payment of employee leave entitlements have been confirmed as being unlawful. But how did it come to this? Commission-only employees: It's time for their MITA review The Real Estate Industry Award requires employers to conduct an annual review to determine if their commission-only employees can continue to be paid on a commission-only basis. What is the MITA: Qualifying for commission-only employment A new acronym is about to enter the real estate industry's lexicon. From 2 April 2018, references to commission-only employment will be uttered in the same breath as "MITA" – Minimum Income Threshold Amount. Real Estate Industry Award: Out with the old, in with the new After a long battle, the Fair Work Commission has now finalised the four-year award review and the new Real Estate Industry Award will commence on 2 April 2018. Here's what you need to know before the changes kick in. Don't be left in the dark: New industry award starts on 2 April 2018 After a long battle, the Fair Work Commission has now finalised the four-year review and the Real Estate Industry Award 2015 will commence on 2 April 2018. Big changes are ahead. Here's what you need to know. Comments are closed.