Disclaimer: These comments are the writer’s own and do not necessarily reflect the current opinions and policies of the Real Estate Institute of Western Australia.
Late last year, the Fair Work Commission (FWC) quietly decided to change the nature of how Real Estate Sales Agents were to be employed in Australia. Most folk are probably aware that – particularly in Western Australia – those engaged in selling property need to be licensed and are remunerated by commission payments upon the successful settlement of property they’re appointed to sell.
Typically, sales agents in WA are employed on a “commission only” basis whereupon the licensed Agent – the employer – shares the commission with the sales representative who, in most states, must be an employee. The decision of the FWC, which comes into effect on 2nd April, will make the employment of sales representatives on this basis far more difficult and will inevitably bring the careers of many sales reps to a premature end.
After the 2nd April, employers of sales representatives paid by commission only (such as myself) will be obliged to ensure their staff meet a “minimum income threshold test” (MITT) on the anniversary of their employment. An employee will need to earn in commissions 125% of the minimum Award wage each year (about $52,000) in order to continue as a commission-only employee. At Perth’s median house price of $520,000, assessed on average commissions paid and the share thereof, that’s about 11 sales a year. Average earnings of sales representatives in WA are currently about $45,000 per annum. Most of these reps will simply lose their jobs.
Agent employers will usually not risk the cost of paying retainers to sales reps in the event they leave prior to selling sufficient property to recover the cost of the retainers paid. There are plenty of experienced, moderately performing sales reps caring for the needs of their clients perfectly well. Many of them are close to retirement, happily “keeping their hand in” and topping up their superannuation. Thanks to the unionist based in South Australia with fewer than 20 members who brought the action before the FWC, these honest, long-serving sales agents will inevitably lose their jobs because their employers cannot afford to move them to a retainer based salary.
Reps that have an “off year” are also in the firing line with those who dip below the threshold unable to continue on comm-only. Bizarrely, if a rep has made the MITT within the last three years, they can be employed elsewhere on comm-only but can’t stay at their current employer on the same arrangement! And, “What happens if I go on paternity leave?” I was recently asked. Employers are obliged to leave open the job for 12 months in such situations but the rep is unable to return on the same employment standards as comm-only. It would appear the FWC didn’t consider that.
It’s evident the FWC thought they were improving the employment conditions of selling agents; sadly, their decision has inadvertently lead to the premature end of many long-term contributors to the real estate industry.
by Hayden Groves
REIA Deputy President