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 whom are employed by small employers with four or fewer staff.
Senior employment adviser from Employsure James Houghton said that the substantive changes have now been finalised by the Fair Work Commission, which is going to require action from the industry.
“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,” Mr Houghton said.
The employment adviser said that these are the six significant changes to consider:
1. Classification and structure
Mr Houghton said that, rather than classifying employees by way of reference to job title, the FWC has determined it more appropriate to set levels by way of reference to an employee’s level of skills and responsibility.
“The new system was introduced to make the task of classification easier for both employers and employees alike,” the adviser said.
“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.”
But Mr Houghton warned that the new job classifications could be problematic for small boutique real estate businesses where staff often wear many hats.
2. 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, Mr Houghton said.
The award rates of minimum weekly pay will be increased in line with levels of seniority, from associate level 1, at $728, to in-charge level 4, at $930.
“If you are currently paying beneath the new rate levels, then you are required to adjust the employee’s rate. Failure to do so by that time would result in underpayment.”
3. New minimum income threshold amount
“Arrangements will continue which allow certain real estate salespeople to be engaged on a commission-only basis,” Mr Houghton said, with some caveats.
“Post 2 April, 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, in particular the minimum income threshold amount.”
Mr Houghton added that, to satisfy the requirements, an employee must show that they received a salary in any consecutive 12-month period in the preceding three years equal to 125 per cent of the minimum award rate for the relevant classification.
4. Commission-only review and cancellation
Mr Houghton said that the FWC has 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.”
He added that where an employee fails to satisfy the above criteria, they must revert to a salaried position in accordance with the wages prescribed in the award.
5. No all-up commission rate for commission-only employees
The all-up commission rate in commission-only arrangements has been deemed unlawful and inconsistent with the National Employment Standards, the adviser said.
“This means that commission-only employees must be paid their NES entitlements such as annual leave and sick leave at the time the entitlement is taken.”
Mr Houghton said that, in addition to these changes, new allowances have been incorporated into the award, relating to the use of mobile phones and motorbikes.