REEF - Real Estate Employers' Federation News | Part-time commission-only arrangements must cease

Part-time commission-only arrangements must cease

May 8, 2019 By Reef Admin Commission only employment 0

The Fair Work Commission has determined that from 30 June 2019, part-time provisions will no longer be able to be applied to a commission-only employee.

Since the Real Estate Industry Award commenced operation in January 2010, it has been permissible for a commission-only employee to be employed on a part-time basis. From 30 June 2019 this will no longer be the case.

What does this decision mean for employers?

First and most importantly, there's no effect on "wages" as a commission-only employee's remuneration is based solely on results and not on the number of hours they work.

The decision only imposes one change of substance.

This change concerns how real estate employers will accrue the salesperson's NES entitlements (including things like annual leave, personal/carer's leave and notice of termination of employment).

From 1 July 2019, employers will need to accrue a commission-only employee's NES entitlements on the basis that the employee works 38 hours a week (even if a lesser number of hours has been previously agreed). So, irrespective of whether the commission-only employee works eight hours or 60 hours a week, their annual leave entitlement (for example) will accrue as if they work 38 hours a week.

The bottom line

How employers respond to this decision will depend on a number of considerations.

If you're comfortable to accept the increased NES liability, then it will be business as usual. The employee will continue to work their current hours, but their NES entitlements will accrue as if they work 38 hours a week.

If, on the other hand, you're unwilling to adopt the increase in the employee's NES entitlements, there will be a need to consider other alternative strategies to manage the problem in order to comply with the law. One such strategy is to discuss the possibility of moving to a part-time salaried arrangement on a debit-credit or target-based commission structure with the salesperson.

While REEF is disappointed with the Fair Work Commission's decision on this matter, the impact should be manageable – especially given the strong safeguards under the Award which operate to limit commission-only employment to proven real estate performers.