Real Estate Industry Award 2020 Summary

In this article, we detail some of the key provisions in the Real Estate Industry Award 2020 including a variety of employees in the real estate industry and, unlike most other awards, allows for certain employees to be paid on a “commission-only” basis.

Employment Innovations advises a large number of organisations in this sector and has produced this Real Estate Industry Award 2020 to help employers cut through the complexities of the award.

If you require any assistance in understanding your rights or obligations under the Award, please contact us.

Table of Contents

Coverage

The Real Estate Industry Award covers employers throughout Australia that are operating within the ‘real estate industry’. This is defined as: “the provisions of services associated with sales, acquisitions, leasing and/or management of residential, commercial, retail, industrial, recreational, hotel, retirement and any other leasehold or real property and/or businesses. These services include:

• real estate agencies

• business and hotel broking;

• strata and community title management (or similar service however described);

• stock and station agency;

• buyers agency; and

• real estate valuation.”

The Award is designed to cover a range of employees performing duties described within the classifications in Schedule A of the Award. 

This includes roles such as property managers, real estate agents and strata managers. However, the Award does not provide coverage for roles which are wholly or predominantly clerical in nature,  for example a receptionist role. It is likely these roles will be covered by the Clerks – Private Sector Award 2020. The Award is also unlikely to cover roles such as cleaners, gardeners or maintenance workers that are providing work for businesses within the real estate industry. 

The different classification levels in the Award determine the minimum wage that an employee is entitled to and must be paid. Employees must be informed of their classification level in writing.

The Award also contains complex provisions around the payment of commissions and bonuses. Unlike most awards, the Real Estate Award allows for some employees to be paid on a “commission-only” basis.

Types of Employees

Employees must be classified into one of these three categories:

(a) Full Time

(b) Part Time

(c) Casual

It is a requirement under the Award that an employer inform each employee at the time of engagement whether they are employed on a full-time, part-time, or casual basis.

Full-time;

Full-time employees are engaged to work an average of 38 ordinary hours per a week. 

Part-time;

A part-time employee is someone who works an average of less than 38 hours. Part-time employees receive pro-rata pay and conditions equivalent to full-time employees.

Casual;

Casual employees are employed with an agreement that there is no firm commitment about on-going work. Typically, casual employees are unlikely to have regular working hours or guaranteed hours of work. The Award specifies that casuals are entitled to an additional 25% casual loading on the minimum hourly rate and this loading is paid instead of annual leave, personal/carer’s leave, termination and redundancy benefits.

The minimum engagement for each time a casual employee works is 3 hours.

Casual Conversion

Casual employees employed in businesses with 15 or more employees are entitled to be offered to have their employment “converted” to permanent employment if they have been employed at the business for at least 12 months, and if in the last 6 months, they worked a regular pattern of hours on an ongoing basis which they could continue performing on a permanent basis without significant adjustment. This offer of conversion only doesn’t have to be made where there are reasonable business grounds for not doing so. 

For smaller businesses, casual employees have a right to request conversion after the same period – this can only be refused on reasonable business grounds.

See further guidance here.

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Ordinary Hours of Work and Rostering

An employee may work their ordinary hours on any day of the week. The maximum ordinary hours of work that can be worked is an average of 38 hours. Hours can be averaged over an 8 week period. Hours worked in excess of this are to be paid as overtime.

Rostered time off ;

Part-time and full-time employees must be allowed one-and-a-half or two rostered days free of duty each week. Rostered time off may be taken as: 

• one consecutive period;
• two periods; or 
• three periods made up of two half days and one full day off.

Rostered time off is time within a specified roster period whereby an employee is not required to work and such time off is unpaid.

Break;

After each 5 hours of work, employees are entitled to a 30 minute unpaid meal break, expect where an employee’s daily hours worked are not longer than 6 hours (in which case they can agree not to have a meal break)

Allowances

The Award sets out a number of allowances employees can be entitled to, including:

• Motor vehicle and motorcycle allowance – for where the employee is required to use their own vehicle for work, payable either as a per km allowance or in a lump sum, see clause 17.2;
• Mobile phone reimbursement where the employee is required to use their phone for work purposes, see clause 17.7;
• Uniform allowance, see clause 17.8;
• Stand-by and call-back allowances (see below).

Overtime Rates

All work performed outside the ordinary hours set out above must be paid overtime rates as stated below.

This means overtime is paid in the following circumstances:

• hours worked in excess of the ordinary weekly hours (generally an average of 38 hours averaged over an 8 week period);
• having less than one and a half days rostered day off;
• working on a rostered day off

Time off instead of payment for overtime

An employee and employer can agree in writing for the employee to be provided with paid time off as opposed to being paid for a particular amount of overtime worked.

This arrangement must be in a separate agreement each time overtime is worked and must include the following:

• the number of overtime hours which it applies to, and when they were worked;
• that both the employer and employee agree that the employee is taking time off instead of being paid for the overtime;
• if the employee requests that they wish to be paid the overtime hours covered in the agreement, instead of taking it off, the employer must pay the employee the overtime rate applicable; and
• any payment mentioned must be made in the next pay period following the request.

The period of time off that an employee is entitled to take is the same as the number of overtime hours worked. For example, an employee who worked 2 overtime hours is entitled to 2 hours off.

The time off must be taken:

• within the period of 6 months after the overtime is worked; and
•  at a time/s within the 6 months agreed upon by both the employee and employer.

Stand-by and call-out

Where the employer requires an employee under a property management or strata and community and title management role to be on stand-by and/or to be called out outside of ordinary hours of work, the employer and employee must, agree in writing on a method of payment for due compensation for the employee being on stand-by and/or call-out.

An employee’s salary in excess of the minimum weekly wage may be inclusive of due compensation provided that the due compensation component of the salary is identified in the agreement.

If the employee is on stand-by and/or call-out outside of ordinary hours of work and if an agreement is place, the time the employee is on stand-by and/or call-out will not count towards an accrual of ordinary hours of work. If there is no agreement in place, the time during which the employee is on stand-by and/or call-out will count towards an accrual of ordinary hours of work.

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Payment of Wages

Wages and allowances must be paid by the employer on a weekly, fortnightly or monthly cycle, excluding the payment of commission, bonuses or incentive payments (in respect of which, see further below).

A casual employee must be paid at the end of the employer’s usual pay cycle unless the parties agree to payment being made upon conclusion of the employee’s shift.

Payment on Termination of Employment

Employees must be paid no later than 7 days after the date on which their employment terminates (except for payment in lieu of notice which must be paid upon termination of employment).

Payment of Commission, Bonus or Incentives

It is common in the real estate industry to pay employees commission, bonuses and/or incentives. The Real Estate Industry Award allows for certain employees to be paid on a “commission-only” basis, but it is also common for employees to be paid a commission in addition to a regular wage.

In either case, where  there is an agreement that an employee will be entitled to a portion of the commission paid to the employer (eg for a property sale), then the method of calculation or formula for calculating the amount of commission payable to the employee must be evidenced in a written agreement between the employer and the employee. 

For both commission-only employees and where commission is paid on top of wages, any variations to the written agreement dealing with the employee’s commission, bonus or incentive payment must be in a further written agreement between the employer and employee.

Where an employee agrees with the employer to a change in his or her commission, bonus or incentive arrangement, the employee will be entitled to receive sales commission, bonus or incentive payments calculated in accordance with the written agreement which was in force on the date the contract for sale or lease of property became legally enforceable. An exception to this rule is in circumstances where a non-commission-only employee is changing to a commission-only agreement, then the commission-only agreement must not include any provision for a deduction arising from any agreement which was in force immediately prior to the commission-only agreement becoming operative.

Entitlements to commission after employment ends

The following rules apply to both commission-only arrangements and for commission paid on top of wages.

Where the employee’s employment ends, the employee is entitled to be credited with a portion of the commission, incentive payments or bonuses calculated in accordance with the terms of their written agreement (whether in respect of commission paid on top of wages or a commission-only basis) as follows: 

   (i) where the employee’s employment is terminated for reason of the employee’s serious misconduct, they will only be entitled to commission where there was a legally enforceable contract in place for the sale or lease of the property before the date of the employee’s employment terminating; or

   (ii) where the employee’s employment terminates for any other reason,  they will only be entitled to commission where there was a legally enforceable contract in place for the sale or lease of the property prior to the expiration date of the exclusive agency period.

An “exclusive agency period” means the period for which the employer has the exclusive right to sell or lease a property under the executed and valid agency agreement that was in effect at the time the employee’s employment ceased. There is no entitlement to commission following termination of employment where the property for sale or lease has been listed other than on an exclusive agency basis.

Unless the written agreement dealing with commission, incentive payment or bonuses specifies otherwise, the portion of the commission, incentive payments or bonuses payable must be the same as that with which the employee would have been entitled to be credited if their employment had continued.

Any entitlement to commission, incentive payments or bonuses calculated at the end of employment only arises once the employer is paid commission by the client in respect of the sale or lease of the property to which a legally enforceable contract relates and the commission payment is cleared into the employer’s bank account.

When does commission, bonus or incentives have to be paid?

If an employee is entitled to receive any commission, bonus or incentive payment, payment to the employee must be made within 14 days of the entitlement becoming payable.

The employee’s entitlement to commission, bonus or incentive payment only becomes payable once the employer has received cleared funds from its client for the transaction(s) to which the employee’s entitlement relates.

Debit/credit commission payments

A common way for employees to be paid commission in the real estate industry is on a “debit/credit” model. This might be used where it is not possible to engage an employee on a commission-only basis because, for example, the employee works part-time or they are new to the industry and cannot demonstrate they have met the Minimum Income Threshold Amount (MITA) in previous years.

One common way for this to be arranged is on a debit/credit system. Under such a system an employee will be paid the minimum salary payable under the Award (and payments for leave taken, etc) but they will only be paid a commission where the commission earned is enough to set-off or compensate the employer for the costs they incur in employing the employee (which might also include things like superannuation, workers compensation premiums, etc).

This is a perfectly acceptable manner of arranging things so long as all the relevant provisions of the Award are complied with.

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Commission-only Employment

In addition to the rules regarding commission payments set out above, the Real Estate Industry Award also allows for certain employees to be paid on a commission-only basis. This means that they do not receive a regular salary or wage, but instead they are remunerated wholly by commission. They do, however, need to be paid for leave that is taken at the time leave is taken, even if they have not earned any commission (see further below).

In order to engage an employee on a commission-only basis they must meet the following criteria (designed to ensure that commission-only employees will receive an acceptable level of remuneration):

1.   They must have been engaged at a Real Estate Employee Level 2 or higher classification (or have operated their own real estate business for at least 12 consecutive months in the 3 years prior to entering into a commission-only agreement);
2.   They must be full-time, and cannot be part-time or casual;
3.   They must have been issued with a real estate agent’s license or is registered or permitted to perform the duties of a real estate salesperson under real estate law;
4.   They must be at least 21 years of age;
5.   They must be able to establish (with the present or any past employer) that they have achieved the Minimum Income Threshold Amount (MITA) (as defined below). The MITA will not have to be achieved in circumstances where the employee has operated his or her own real estate business within the last 3 years.

Minimum Income Threshold Amount (MITA)

One of the most important criteria that must be met to be able to engage an employee on a commission-only basis is that they have met the  Minimum Income Threshold Amount (MITA) – basically, that they have earned a sufficient amount in previous years which suggests that they will continue be able to earn a reasonable amount through commission-only payments in the future.

The Award states that the MITA will have been achieved if the employee can establish that in any consecutive 12-month period in the 3 years immediately preceding entering into the commission-only agreement, the employee received annual remuneration (including any commission or bonus payments) at least equal to 125% of the current minimum wage applicable to the employee’s classification level, calculated as an annual amount, excluding statutory superannuation.

The type of documents that an employer may rely upon to establish that the MITA is satisfied, include but are not limited to:

• individual payment summaries;
• payslips; and
• commission statement records or other sales records.

Minimum commission-only rate

Commission-only employees must be paid a minimum commission rate. The Award states that the minimum commission-only rate is calculated as 31.5% of the employer’s gross commission which is defined as the commission received by the employer from a client for a sales or leasing transaction less GST and conjunctional agent fees.

A commission-only employee is always entitled to at least the minimum commission-only rate for each sales or commercial leasing transaction for which the employee was responsible.

In the situation where:

• Two or more employees are separately responsible for different components of a sales or commercial leasing transaction; and
• The employer is able to split the employees’ portion of the employer’s gross commission according to the component(s) for which the particular employee was responsible,

Any commission-only employee responsible for one or more component(s) is entitled to at least the minimum commission-only rate proportionate to the value of each component.

For example, the different components of a sales or commercial leasing transaction might be set up like this:

Where matters are set up this way, the proportionate value of each component must be as agreed in writing between the employer and the employee.

Paying higher commission rates than the minimum commission-only rate

It is common for employers and employees to agree that commission-only employees will be entitled to a higher commission rate than 31.5% (eg 50%). 

The Award states that where this occurs,  then any method of calculation, or any formula for calculating what amount of commission will be payable to the employee in excess of the minimum commission-only rate, must be evidenced in a written agreement between the employer and the employee.

Annual reviews and when commission-only arrangements must cease

The gross income of commission-only employees must be reviewed annually by each anniversary of entering into the commission-only arrangement. Where the review establishes that the gross income of a commission-only employee for the year under review is less than the MITA, the commission-only arrangement must cease.

Resumption of commission-only arrangements

Where a commission-only employee has ceased to be employed on a commission-only arrangement due to not meeting the MITA requirements, the 3-year period for the purpose of assessing whether the employee has achieved the MITA for the purposes of entering into further commission-only arrangements, commences from the date the employee ceased to be a commission-only employee due to not meeting the MITA requirements.

Payment for leave

Commission-only employees are entitled to leave, the same as any other employee (annual leave, personal/carer’s leave, etc).

The Award says that they must be paid for periods of leave at the time the leave is taken, and at a rate no less than the employee’s base rate of pay (which it defines as  the minimum wage set for their position in clause 14.1 of the Award). 

The Award states that where an employee is subject to a commission-only agreement which provides for a percentage in excess of the minimum commission-only rate of 31.5%, the payment made for leave may be treated as a debit on the employee’s account for this additional percentage. This arrangement must be clearly set out in a written agreement.

In other words, if a commission-only employee receives a commission rate of 50% (18.5% above the minimum rate of 31.5%) the payment they receive for leave could be applied against the 18.5% so that they only get paid commission where there is sufficient commission to set-off or compensate the employer for the payment for leave.

Other entitlements

Commission-only employees are also entitled to be absent from work on public holidays and to be paid for the ordinary hours they usually would have worked at the minimum rate for their classification set by the Award. 

Similarly, redundancy pay for commission-only employees is calculated on the minimum rate set by the Award. 

Payment in lieu of notice is, however, paid at the greater of: 

   (i) the minimum wage under the employee’s classification level; or

   (ii) the employee’s average weekly remuneration over the 12 months (or, if the employee has been employed less than 12 months, that period) immediately prior to when the redundancy pay is to be calculated. 

For this reason, it will often be more commercially viable for a commission-only employee to be required to work out their notice period (or be placed on gardening leave during the notice period), rather than for notice to be paid in lieu. 

For long service leave, employers should be aware that some long service leave legislation provides for payment for long service leave to include an average amount of commission earned by employees (subject to limited exceptions) which means that the payment of long service leave can be significant for employees who earn high rates of commission.

Leave and Public Holidays

Employees are entitled to leave in accordance with the National Employment Standards (NES) set out in the Fair Work Act 2009. For full-time and part-time employees (including commission-only employees) this includes four weeks annual leave per year and 10 days personal/carer’s leave.

Annual leave loading

Employees are entitled to an annual leave loading (i.e. an uplift in the wages)of 17.5% of the applicable minimum wage when they take a period of annual leave.

Annual leave loading is not payable to commission-only employees.

Annual leave in advance

The Real Estate Award provides for employees and employers to agree for annual leave to be taken in advance of its accruing and any annual leave owing to be deducted from an employee’s termination pay. This agreement must be agreed in writing, detailing the amount of leave to be taken, the date the leave will be taken and signatures of both parties.

Annual shut-downs

Employees may be required to take annual leave during a period the business has a shut-down (eg at Christmas), so long as they are given at least 28 days notice.

An employer cannot require a permanent employee to take leave without pay during a shut-down if they do not have sufficient annual leave to cover the shutdown, but the employer and employee may agree to the employee taking leave without pay.

Cashing-out annual leave

Employees are permitted to cash out annual leave if:

• There is a separate written agreement between the employee and employer;
• The agreement does not result in the employee’s remaining accrued entitlement to paid annual leave being less than 4 weeks; and
• The maximum amount of accrued annual leave being cashed out in any period of 12 months is 2 weeks.

Excessive leave accruals

The Real Estate Award states that an employee can be required to take annual leave where they have “excessive leave” accrued. The award defines this to mean more than 8 weeks paid annual leave. If an employee has excessive leave accrual, the employer and employee must confer with each other to genuinely reach an agreement on how to reduce or eliminate the excessive leave accrual.

 If after genuinely trying to reach an agreement, the employee refuses to take paid annual leave, the employer can direct the employee in writing to take period/s of annual leave. However, strict rules apply under the Real Estate Award including:

• the employee cannot be required to take leave if their leave balance would be less than 6 annual leave weeks;
• the employer cannot require to employees to take a period of annual leave of less than one week; and
• the employer must not require the employee to take a period of paid annual leave beginning less than 8 weeks, or more than 12 months after the direction is given.

Personal/carer’s leave

The Real Estate Award states that the entitlement to personal/carer’s leave is outlined in the National Employment Standards which is:

• 10 days paid leave for full-time employees; and
• Pro-rata for part-time employees.

Other leave

The Real Estate Award states that the following types of leave are available, as outlined in the National Employment Standards:

• Compassionate leave;
• Parental leave and related entitlements;
• Community service leave; and
• Paid family and domestic violence leave.

Public holidays

The Real Estate Award states that public holiday entitlements are available as outlined in the National Employment Standards. This means that an employee is entitled to be absent from work on a day that is a public holiday. Employees can be requested to work on a public holiday and can only refuse such a request where it would be  reasonable to do so.

Permanent employees who ordinarily would work on a day that is a public holiday are entitled to be paid their usual base rate of pay for being absent on the public holiday.

An employee who works on a public holiday at the direction of the employer will be entitled to be paid 200% of the minimum hourly rate for the hours worked, with a minimum payment for 3 hours work.

Consultation About Major Workplace Change

The Real Estate Award provides that employers must follow strict guidelines when consulting employees regarding:

• Major workplace changes;
• Changes to rosters or hours of work; and
• Dispute resolution.

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Termination of Employment

An employer must give an employee notice of termination of at least the minimum period stated below,

according to the period of continuous service of the employee.

An additional weeks’ notice is to be provided to an employee if they have had at least two years’ continuous service and is at least 45 years of age.

The notice of termination required to be given by an employee is the same as the above table, except that the employee does not have to give an additional notice based on their age.

Employees who do not provide sufficient notice

If an employee who is at least 18 years of age or older does not give the period of notice required under the Real Estate Award, then the employer may deduct from their wages due to the employee under the award, an amount that is no more than one weeks’ wages for the employee.

Job search entitlement

Where an employer has given notice of termination to an employee, the employee must be allowed time off without loss of pay of up to one day for the purpose of seeking other employment.

Redundancy

The Real Estate Award states that redundancy payments are required as outlined in the National Employment Standards, this means where the business has 15 or more employees, permanent employees will be entitled to the following redundancy payment if made redundant. Employers with less than 15 employees are not required to make redundancy payments:

The Real Estate Award also contains provisions regarding:

• Transferring to lower paid duties when being made redundant;
• Giving employees the right to end their employment period early if being made redundant; and
• Having paid time off when looking for new employment.

Classification Levels Definitions

There are 4 employee classification levels in the Real Estate Industry Award which determine the minimum wage paid to an employee. Minimum wages are outlined in Clause 14 of the Award. Employees aged under 21 years of age are paid at junior employee rates. The levels are detailed below:

Level 1

An employee at this level works under supervision and does not have responsibility for listing and/or selling of property or businesses or is responsible for managing rental or strata/community title properties.

Under the guidance of a more senior person, the typical duties at Level 1 may include (but is not limited):

• Follows up sellers and/or buyers enquiries of property and businesses.
• Answers general enquiries from potential tenants and provides information on properties under management.
• Responds to owner’s enquires regarding strata/community title schemes.
• Under supervision prepares documentation and correspondence such as agency agreements, leases (commercial or residential, advertising for sale or leasing of property and businesses, property inspection reports, title management agreements and owner meeting minutes.
• Provides support to more senior employees with tasks associated with selling, leasing and/or managing property and businesses.
• Assists with auctions and property inspections.
• Receipts collection of rents, including arranging collection of arrears.
• Prospects and canvasses for new business.
• Arranges maintenance and repairs for managed properties.
• Assists with post sale processes.

Indicative job list may include – Property or Buyers Assistant, Property or Buyer’s Associate, Property Officer, Management Associate or Assistant, Property Officer, Leasing Assistant or Strata/Community Title Management Associate or Assistant.

Level 2

An employee at this level works may work as a Level 1 but have additional responsibilities for listing and/or selling of property or businesses, assist clients to buy properties or businesses, or manage rental or strata/community title properties or secure new property managements.

The typical duties at Level 2 may include (but is not limited):

• Performs market appraisals.
• Completes and/or supervises the preparation of documentation and correspondence relating to agency agreements, tenancy agreements, rental bonds, leases, advertising of property and businesses, inventory reports, management agreements and inspection reports.
• Conducts or supervises negotiations with interested parties.
• Sources and secures prospective properties to sell or manage.
• Lists properties and businesses for sale or lease.
• Conducts market research and provides advice.
• Conducts auctions.
• Assesses, and processes tenancy applications lease and manage commercial, industrial and residential properties.
• Organises property repairs and maintenance and provides advice to owners.
• Appears before tribunals and provides property owners with advice relation to state and territory residential tenancy matters.
• Carries out all functions required under a strata managing agency agreements.

Indicative job list – Real Estate Salesperson, Buyer’s Agent, Property Representative, Property Manager or Strata/Community Title Manager.

Level 3

An employee at this level works may work as a Level 2 but have additional responsibilities for organising work, allocating duties, managing and supervising lower level employees.

The typical duties at Level 3 may include (but is not limited):

• Providing leadership and supervision to lower level employees.
• Implement, manage and monitor success of operational plans and work flows.
• Assist in resolving customer complaints.
• Monitor safe work practices.
• Train employees and manage professional development of others.
• Involved in selling property or businesses, leasing property (commercial, retail or residential), and manage a portfolio of rental properties or strata/community title schemes.
• Manage owners corporate processes.

Indicative job list – Property Sales Manager or Supervisor, Property Management Supervisory or Strata/Community Title Management Supervisor.

Level 4

An employee at this level will hold an appropriate qualification under the real estate law and may work as a Level 3 but have additional responsibilities for ensuring the business is compliant with statutory obligation under real estate law.

The typical duties at Level 3 may include (but is not limited):

• Planning and managing the business’ financials
• Ensure the office is compliant with statutory obligations under real estate law
• Facilitate change and innovations
• Manage the office
• Supervise the team

Indicative job list – Licensee-In-Charge or Agency Manager.

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How Employment Innovations can help

If you require assistance with dealing with disciplinary issues concerning staff, Employment Innovations can help. Our HR Advisors will be able to guide you through each step of the disciplinary process and we have template documents (e.g. direction to attend a disciplinary meeting, written warning, letter of termination, etc) available as part of our subscription packages.

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Disclaimer

The information provided in these knowledge base articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.

This knowledge base article will change over time, as Modern Award legislation relating to this Industry or Occupation is passed by the Fair Work Commission. Originally published on 21 January 2021 and last updated on 22 March 2022.

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