New laws from the Fair Work Commission designed to protect agents may end up having the opposite effect, according to Real Estate Institute of Australia Deputy President Hayden Groves.
The day after this year's April Fool's Day may have carried serious consequences for a cross-section of Australia's real estate sector, according to Real Estate Institute of Australia Deputy President Hayden Groves.
April 2 marked the anniversary of the Fair Work Commission's changes to the Real Estate Award, in particular to the minimum income threshold.
Under the new laws, an employee has to show that over a single 12 month period in the previous 3 years, they were paid an amount (including commission or bonus payments) at least equal to 125% of the minimum award wage.
At a glance:
Any agent who was paid on a commission-only basis prior to April 2, 2018, were required to have their gross income reviewed by April 2, 2019.
If their income falls below the minimum income threshold, they can't continue to be paid as a commission only employee.
Mr Groves, who is principal and director of Dethridge Groves Real Estate in Western Australia, told WILLIAMS MEDIA the changes 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.
"Many have already lost their jobs in the regional areas, where the sales volumes are fairly low," he said.
"These are salespeople who are loyal to the agents and work hard for their clients but can't continue because their employer doesn't want to take the risk of putting them on a salary.
"In many ways, it's a pretty poor outcome for employers."
The changes were announced following the Fair Work Commission's quadrennial review into the Real Estate Industry Award 2010, which included consultation with industry representatives such as Real Estate Salespersons’ Association, Australian Property Services Association Queensland, Real Estate Employers’ Association and Real Estate Employers’ Federation.
As part of the new system, a person who would ordinarily be classified as a ‘Real Estate Employee Level 2 (Representative Level)’ under the Award must now achieve annual remuneration of $52,591.50 or more to remain in commission-only employment.
According to Mr Groves, this equates to about 11 sales a year in Perth.
He said while he could understand the push for greater safeguards in terms of income, the alterations to the award had "missed the point" of real estate sales in Australia.
"Pay is commission based because that is the incentive," he said.
"The whole job is to incentivise the employee to get the best outcome for their clients.
"If you diminish that incentive by just giving them a salary, then you are fundamentally changing the entire common law precept of principal and agent.
"In a way, it is counterproductive to the methodology of real estate sales in this country."
By Sean Slatter
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