| [2018] FWCFB 1532 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.156 - 4 yearly review of modern awards
4 yearly review of modern awards—Real Estate Industry Award 2010
(AM2016/6)
VICE PRESIDENT HATCHER |
MELBOURNE, 16 MARCH 2018 |
4 yearly review of modern awards – AM2016/6 – Real Estate Industry Award 2010 – substantive matters – further decision.
[1] This Decision concerns the Review of the Real Estate Industry Award 2010 1 (the REI Award) conducted as required by s.156 of the Fair Work Act 2009. This Full Bench has issued two Decisions in relation to the Review of the REI Award – on 17 January 20182 and 6 July 20173 – and a number of Draft Determinations and exposure drafts of the REI Award. This Decision should be read in conjunction with the earlier Decisions Draft Determination and exposure draft issued on 17 January 2018.
[2] In our Decision of 6 July 2017, we provisionally determined to award an increase to the minimum wage rate for the Property Sales Representative Classification and indicated provisional views in relation to a range of contested matters, including a minimum threshold of 125% above the rate for the relevant classification, for employees entering into commission only arrangements. The parties were given a further opportunity to agree on relativities and wage rates for other classifications in the REI Award with reference to the new provisionally determined wage rate for the Property Sales Representative classification.
[3] A conference of the parties was conducted on 2 November 2017 and agreement was reached on relativities and wage rates for other classifications in the REI Award and on new classification definitions which amalgamated previously separate definitions for employees working at various levels in the areas of Property Sales, Property Management and Strata/Community Title.
[4] A further Decision attaching a draft determination was issued on 17 January 2018 indicating our approval of a new classification structure, classification definitions and relativities for all classifications in the REI Award. We also indicated our acceptance that the nature of the work performed by employees under the REI Award and the level of skill and responsibility involved in the performance of that work, justified wage increases consequential on the relativities agreed by the parties, and provisionally approved those increases with effect from 2 April 2018. We further stated that we were satisfied that variations to minimum wages are necessary to achieve the modern awards objective in s. 134(1) of the Act taking into account the considerations specified in paragraphs (a) to (h), and the minimum wage objective in s.284(1) taking into account the considerations in paragraphs (a) to (e).
[5] The parties were given a further opportunity to comment on a Draft Determination which included the variations to the REI Award to give effect to the Full Bench Decision. In response, further submissions were received from the following parties:
• Registered Real Estate Salespersons’ Association of South Australia 4 (RRESSA);
• Real Estate Employers’ Federation 5 (REEF); and
• Real Estate Employers’ Federation of Western Australia 6 (REEFWA).
[6] A further conference of the parties was conducted on Tuesday 13 March 2018 and agreement was reached in relation to a number of additional amendments proposed by the parties, based on the current Draft Determination and Exposure Draft. Those amendments are summarised below.
[7] The agreed amendments to the Draft Determination are in relation to the following matters proposed by RRESSA and REEF are as follows:
[8] RRESSA proposed the following amendments with reference to the Draft Determination:
• Addition to paragraph 14.2 clarifying that past service of an employee at Associate level as at 2 April 2018 will count for the purpose of determining whether the employee is in the first twelve months of employment;
• Insertion of reference to “employer’s gross commission” in clause 16.5(c)–(f) in line with the Decision of the Full Bench to amend the minimum commission payable to commission only salespersons from 35% of the employer’s net commission to 31.5% of the employer’s gross commission;
• Amendment to clause 17.3 to clarify entitlements to commission after employment ends;
• Retention of the word “principally” in the definition of Real Estate Employee Level 1 (Associate Level). 7
[9] REEF proposed the following amendments with reference to the exposure draft issued on 31 January 2018:
• Amendment to clauses 9.7(a) and 9.7(b) to reflect the broad banded classification structure and that in addition to property sales employees, other employees engaged in commercial, industrial or retail leasing as a Real Estate Employee Level 2 or higher may agree to enter into commission only arrangements;
• Amendment to clause 9.7(e) to clarify that commission only employees are not entitled to annual leave loading;
• Clarification that stand-by and call-out provisions only apply to employees in a property management or strata title role; and
• Removal of the definition of “employer’s net commission” from the Definitions in Schedule G and substitution of “employer’s net commission” with “employer’s gross commission” in clause 9(f)(iii) on the basis that the employer’s net commission will no longer be the basis for the calculation of commission under the Award.
[10] In our Decision of 6 July 2017 we expressed the provisional view that the threshold for entry into commission-only employment should be an amount of 125% above the relevant property sales classification of the employee. This provisional view was contrary to the RRESSA claim for a threshold of 160%. REEFWA maintained that the threshold should be maintained at 110% as it is in the current REI Award and that the need for an increase had not been established by probative evidence. REEFWA also contended that in 2009 when the REI Award was made by consent, it was agreed that 110% was an appropriate threshold for entry into commission-only employment and that nothing had changed since that time to justify a significant increase to the threshold.
[11] In its submissions in response to our provisional view that the threshold for entry into commission-only employment should be an amount of 125% above the relevant property sales classification of the employee, REEFWA maintained its opposition, and contended that that the preliminary decision of the Full Bench to increase the threshold from 110% is a significant change and that no evidence was adduced by RRESSA or before the Full Bench nor did the Full Bench refer to any such evidence in support of its decision to increase the threshold from 110% to 125%. REEFWA further maintained its opposition to the threshold for entry being 125% in its submissions in response to matters raised in our Decision of 17 January 2018.
[12] In continuing its opposition to this amendment, REEFWA recognised that other employer groups do not object to the increase in the amount a real estate salesperson must make in commissions in order to qualify as a commission only salesperson but pointed out that agreement by other parties does not dissolve the onus on RRESSA, as the proposing party, to demonstrate the necessity of this proposal, through probative evidence.
[13] For reasons previously set out in our Decisions of 6 July 2017 and 17 January 2018, we have determined that our provisional views in relation to classification definitions, relativities and resulting wage increases, should be implemented from 2 April 2018. As we have previously found, even a cursory comparison of comparable minimum rates for employees under other Awards, in particular minimum rates in the Clerks Private Sector Award 2010 8, establishes on an objective basis that the work performed by all classifications in the REI Award was undervalued when the REI Award was made and continues to be so. Further, the classifications in the REI Award have never been subject of a work value consideration. The Increases to the minimum rates on work value grounds are clearly justified.
[14] We have determined that the amendments which have been the subject of our previous Decisions and set out in Draft Determinations and exposure drafts of the REI Award, incorporating the matters agreed by the parties on 13 March 2018, should also be implemented with effect from 2 April 2018.
[15] Further, we have decided that our provisional view in relation to the minimum threshold for entering into commission only arrangements being set at 125% of the relevant minimum rate should be implemented and we do not accept the submission of REEFWA to the contrary. We do not accept that an increase in the percentage rate from 110% to 125% is significant in the context of this case. Employers have been on notice since July 2017 of our view that the classifications in the REI Award are undervalued and have been so since the Award was made. Employers have had the benefit of undervalued minimum Award rates since 2010.
[16] The establishment of a minimum threshold for entry into commission only arrangements of 125% is in our view both appropriate and consistent with the modern awards objective. In relation to the modern awards objective we have had regard to all of the considerations in s.134(1) of the Act and in particular those in s.134(1)(d), (da), (f) and (g) which respectively require consideration of:
“(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and
(da) the need to provide additional remuneration for:
(i) employees working overtime; or
(ii) employees working unsocial, irregular or unpredictable hours; or
(iii) employees working on weekends or public holidays; or
(iv) employees working shifts; and
…
(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and
…
(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards;…”
[17] In particular, we are cognisant that entry into commission only arrangements means that employees cease to be entitled to a range of provisions of the REI Award, including overtime. Commission only arrangements afford significant flexibility to employees and also to employers. The case that the REI Award already provides for significant flexibility with respect to hours of work, providing as it does that ordinary hours may be worked on any day of the week with one and a-half or two days off taking in a variety of ways, and averaged over an eight week period. It is appropriate that the further flexibility arising from the ability to enter into commission only arrangements should require a minimum entry threshold of 125% given the entitlements that such arrangements effectively buy out.
[18] The 125% threshold recognises the flexibility with respect to the manner in which commission only employees work their ordinary hours. The threshold provides a more flexible mechanism for entering into such arrangements than is provided by other Awards. In particular, the Clerks Private Sector Award 2010 provides for annualised salaries but requires an annual review to be conducted to ensure that compensation is appropriate, having regard to the award provisions satisfied by the salary. We also consider that 125% is appropriate having regard to the fact that the broad banding of classifications under the REI Award means that a wider range of employees can enter into commission only arrangements. We further note, as set out in our Decision issued on 6 July 2017 Decision that REEFWA accepts that there are currently real estate salespersons in Western Australia employed on a commission-only basis, who earn more than the current threshold of 110% but less than the 160% formerly proposed by RRESSA. On that basis we do not accept that the effect of an increase from 110% to 125% will have a significant effect. Further, we note that no other party has raised an issue with the quantum we have determined.
[19] A Determination giving effect to the amendments is appended to this Decision and will operate from 2 April 2018.
VICE PRESIDENT
Printed by authority of the Commonwealth Government Printer
<MA000106, PR601174>
4 RRESSA submission, 23 February 2018.
5 REEF submission, 26 February 2018.
6 REEFWA submission, 23 February 2018.
7 RRESSA sought deletion of the word “principally” but agreed to its retention.