The “foolish” minority of principals that has failed to document commission-only employment arrangements is likely to be the primary target of a Fair Work Ombudsman probe into the real estate industry, the Real Estate Employment Federation of NSW (REEF) has said.
“Quite frankly, that’s foolish business practice,” Mark Patterson, executive director at REEF, told Real Estate Business.
The two-month campaign, which will focus on 350 real estate agencies in NSW, is being conducted in response to concerns raised by key industry stakeholders that some employers are not complying with pay obligations to salespeople who receive commissions, Fair Work Ombudsman Nicholas Wilson said.
The probe follows an education program on workplace laws promoted to real estate agencies throughout NSW in the second half of last year, Fair Work said.
According to Mr Patterson, the Fair Work Ombudsman was in close contact with REEF in relation to the investigation, and he praised the government body for delaying the investigation until after the Christmas break.
It was unlikely, he said, that Fair Work will uncover many principals who aren’t meeting their responsibilities, at least based on the 1,500 organisations that are REEF members. Mr Patterson estimated the REEF membership base represented around 70 per cent of the NSW real estate agency market.
He said the investigation was, “in general, reasonably fair” in terms of what it sought from principals. “It’s not terribly onerous,” he said.
He added that letters were sent by Fair Work to the 350 principals on January 9, so all those being targeted for an audit should know by now.
Mr Patterson said it wasn’t uncommon for principals to have some misunderstandings around commission-only employment rules. One area where they might come unstuck centred on the requirement for employees to show proof to an employer that they have the ability – based on past earnings – to generate enough money on a commission-only basis to surpass a minimum income threshold.
“Fair Work inspectors will check that agencies are paying employees correctly, with a particular focus on ensuring salespeople paid on a commission-only or part-commission basis are receiving their full entitlements,” the organisation said.
“Inspectors will also check that reception and administrative staff are being paid their full entitlements, including minimum pay rates and penalty rates.”
Fair Work said it has selected 120 real estate agents in metropolitan Sydney and 230 in regional NSW for the audit.
Chris Lamont, principal at PRD Nationwide at The Entrance, is among the long list of agencies that has received an audit request from Fair Work.
“We have been contacted but we didn’t take it as anything problematic as we have a good office manager who ensures we are up-to-date and above board always,” he said. “If anything, we have seen it as a slight inconvenience, but we know it won’t affect us past the paperwork.”
Mr Lamont believed the audit is a necessity for the real estate industry in order to flush out any wrong-doers.
“It is a very small percentage that doesn’t do what is right by their employees and if they don’t comply then there should be penalties,” he said.
“It is these shonks that we need to get out of the business, so we welcome these audits.”
Douglas Driscoll, CEO at NSW-based Starr Partners, also said he had no problem with the Fair Work Ombudsman launching this type of probe, as employees were entitled to know they were being paid correctly.
“There’s certainly no harm in doing this,” he told Real Estate Business.
It was unlikely real estate principals deliberately underpaid their staff, Mr Driscoll added. More often than not, it was more the case they were too caught up in day-to-day business activities or didn’t know what the correct entitlements were.
For instance, the rules relating to commission-only remuneration are extremely detailed, and many principals may not be aware of some of these requirements, which included an age limit.
Mr Driscoll added that human resources management was becoming an increasingly important issue for real estate principals.
Employers will also be made aware of the free resources available to real estate principals that can assist them in understanding workplace laws, Fair Work said.
“The campaign will also benefit employers who are complying with workplace laws because our auditing of compliance with minimum pay rates will help to ensure businesses are competing on a level playing field,” Fair Work Ombudsman Nicholas Wilson said.
Areas of Sydney included in the campaign are Blacktown, Bondi, Bronte, Burwood, Camden, Campbelltown, Caringbah, Carlton, Castle Hill, the CBD, Chatswood, Hurstville, Ingleburn, Leichhardt, Liverpool, Manly, Maroubra, Miranda, North Sydney, Padstow, Parramatta, Penrith, Port Macquarie, Potts Point, Pyrmont, Randwick, Rockdale, Strathfield, Sutherland and Thornleigh.
Regional areas include Dubbo, Gosford, Newcastle, Lismore, Nelson Bay, Nowra, Orange, Terrigal, The Entrance and Wollongong.