DECISION

Fair Work Act 2009
s.156 - 4 yearly review of modern awards

4 yearly review of modern awards—Real Estate Industry Award
(AM2016/6) 

4 yearly review of modern awards—Real Estate Industry Award 2010

Background

[1] This Decision concerns the application of part-time employment provisions to commission-only salespersons under the Real Estate Industry Award 2010 (REI Award). The matter has arisen as part of the 4 yearly review of that Award. 1 In a Decision issued on 6 July 20172 we expressed a provisional view that because the REI Award does not provide for overtime payments for commission-only employees or any restrictions on when hours may be worked, part-time and casual employment concepts are neither useful nor relevant for commission-only employees, and consequently the Minimum Income Threshold Amount (MITA) for such employees would be set at 125% of the relevant weekly wage rate, regardless of the hours worked by the employee.3

[2] In response to the expression of this provisional view, no employer party sought award provisions enabling the employment of commission-only salespersons on a casual basis. Initially, no party contested the provisional view that part-time employment was not relevant to commission-only employment. This was recorded as a matter that was agreed in a decision which we issued on 17 January 2018, 4 and a determination giving effect to our view in this respect was published on 16 March 2018.5 However on 26 March 2018 the Real Estate Employers’ Federation (REEF) sent correspondence to the Commission asserting that they had not understood there to have been a decision to exclude the employment of commission-only employees on a part-time basis, and this position was supported by the Real Estate Employers’ Federation of Western Australia (REEFWA), the Australian Property Services Association - Queensland Branch (APSA- QLD) and the Australian Property Services Association (APSA). Ultimately we accepted that employer parties had misunderstood the provisional view which we had expressed, and we determined to amend the determination to preserve the pre-existing position and give parties a further opportunity to file submissions and evidence in relation to this issue.6 Directions to facilitate this were issued on 31 July 2018, and a further hearing was conducted before us on 31 July 2018. Submissions were made by REEF, APSA, the Real Estate Employers’ Federation of South Australia and the Northern Territory (REEF SA/NT), the Queensland Real Estate Industrial Organisation of Employers (QREIOE) and the Registered Real Estate Salespersons’ Association of South Australia (RRESSA).

[3] At the hearing the parties also raised an additional issue in relation to the drafting of clause 16.3(a)(iii) of the REI Award which relates to the qualifying requirements for a real estate agent to enter into commission-only employment. This matter was dealt with by way of further written submissions received after the hearing.

Submissions

REEF

[4] The REEF contended that there are sufficient grounds to maintain the existing part-time commission-only arrangements in the REI Award for reasons including that:

•  the current arrangement meets the modern award objective in s 134(1) of the Fair Work Act 2009 (FW Act);

•  there is a lack of cogent evidence to justify its removal;

•  there are strong safe-guards in commission-only arrangements to protect against abuse; and

•  there is inequity and unfairness associated with the removal of the provisions.

[5] In relation to the impact of removing part-time commission-only arrangements from the REI Award, the REEF submitted that this will result in employees working less than full-time hours being entitled to NES entitlements at the full-time equivalent rate. This will have a financial impact on business owners and on employees who will be expected to work full-time hours and days, which may not be desirable or practical depending on their personal circumstances and desire to work on a part-time basis. The REEF also pointed to safeguards in relation to commission-only employment established by the Full Bench in earlier proceedings including an increase to the MITA for the purposes of entering into commission-only arrangements; providing for an annual review of the MITA; and the requirement that the MITA must be achieved without regard to the hours or days worked by the commission-only employee.

[6] The effect of these amendments was said by the REEF to be that commission-only employment has been deliberately restricted to proven sales performers and is not available to new entrants in the industry, casual employees or salespersons without a successful sales history. The REEF also pointed to the REI Award provisions requiring that from 2 April 2018, where the performance of a salesperson falls below the MITA, the commission-only arrangement must cease.

[7] The REEF submitted that these protections are equally relevant for employees engaged on a part-time basis because they require that part-time employees must satisfy the MITA before being engaged on commission-only arrangements and must thereafter perform at the same level as a full-time commission-only employee for the purpose of qualifying and re-qualifying for this arrangement. In relation to the “key issue” of NES entitlements, the REEF submitted that annual leave and other entitlements should be able to be accrued proportionate to the hours worked by the salesperson and not automatically default to the full-time rate of accrual.

[8] The REEF expressed concern that the exclusion of part-time arrangements will have an adverse impact on employees currently employed on a part-time basis. According to the REEF it is impossible to know the number of such employees throughout Australia and they may have entered into lawful part-time commission-only arrangements many years ago. According to the REEF the effect of the Full Bench amending the REI Award to exclude part-time commission-only employment arrangements would present real contractual difficulties because existing part-time employment contracts would become invalid from the date the variation takes effect and the impact on the accrual of both past and future NES entitlements will create a potential for disputation. If the Full Bench was disinclined to alter its provisional position on this issue, the REEF sought in the alternative “grandfathering” of existing part-time arrangements for employees engaged prior to the date of the change.

[9] It was also submitted by the REEF that nothing has changed to necessitate the removal of part-time arrangements for commission-only employees. While the REEF stated that it understood and accepted that the 4 yearly review of modern awards is the Commission’s review, it submitted that the FW Act required that the Commission ensure that each modern award continues to meet the modern awards objective. While the Commission has power to vary the REI Award of its own initiative, this should be done cautiously and only so that the REI Award can continue to meet the modern awards objective. The proposed removal of part-time employment arrangements for commission-only employees was not raised by any party to the proceedings but was announced by the Full Bench on its own initiative. While the RRESSA now supported the proposal, it was not a matter of sufficient significance for the RRESSA to raise it in the formal proceedings in November 2016.

[10] There was no evidence before the Full Bench, the REEF submitted, to enable it to conclude that the change is necessary for the REI Award to meet the modern awards objective or that it is being improperly applied at the enterprise level. Rather the Full Bench has simply formed the view that part-time arrangements are “neither useful nor relevant for commission-only employees” because of the flexible nature of the hours of work provision in the REI Award. The REEF submitted that this does not justify the revocation of the part-time commission-only arrangements and that this flexibility, which applies equally to non-commission employees, has been a feature of real estate industry awards at a State and Federal level for many years.

[11] In oral submissions, the REEF accepted that there is nothing in the current terms of the REI Award that requires a commission-only employee to work any particular number of hours – either more or less than full time hours. However the REEF maintained that the issue of concern was that an employee who works on commission-only arrangements for only two days a week would have NES entitlements calculated on the same basis as a commission-only employee who works five or seven days per week. In response to questions from the Full Bench in relation to how hours would be recorded for part-time commission-only employees, the REEF submitted that this could be done in written agreements, but could not point to any provision of the REI Award requiring that this occur.

REEF SA/NT

[12] The REEF SA/NT also opposed the removal of part-time commission-only arrangements and disagreed with our provisional view in this regard. REEF SA/NT submitted that the exclusion of part-time commission-only employment under the REI Award would be grossly unfair and inequitable on the basis that:

•  it would operate against the modern awards objective;

•  abolishing such arrangement on the basis of an assumption that it is not useful or relevant, without strong evidence, will disadvantage those engaged in part-time employment;

•  there are various safeguards under the FW Act and the REI Award for part-time employees engaged on a commission-only basis; and

•  it would be discriminatory to employees who choose to work on a part-time commission-only basis.

[13] The REEF SA/NT submitted that in the majority of cases, part-time commission-only employment supports employees with parenting responsibilities and those with many years of experience in the real estate industry who are seeking to transition to retirement, enabling them to continue to utilise that experience and be meaningfully employed. In relation to the concerns expressed by the Full Bench about how annual leave and personal leave would be calculated for part-time commission-only employees, the REEF SA/NT submitted that such employees have the protection of the National Employment Standards (NES) and that such entitlements are calculated on a pro-rata basis according to ordinary hours of work. Ordinary hours of work for part-time commission-only employees are confirmed in writing when the parties enter into a commission-only arrangement and the REEF SA/NT submits that it is not difficult to ascertain on what basis their NES entitlements accrue. Further, the REEF SA/NT submitted that the majority of part-time commission-only salespersons manage their own hours of work within the defined ordinary hours due to the flexibility required to meet client needs. An assumption that part-time commission-only employees would be required to work overtime is incorrect, as part-time hours of work are defined in the employment contracts of the employees concerned.

[14] In addition to seeking to maintain part-time provisions for commission-only employees, the REEF SA/NT also submitted that the MITA for such employees should be pro-rated after twelve months to determine whether such employees should remain on commission-only arrangements. It was submitted that there are clauses within the template employment agreements used by members of the REEF SA/NT which note actual hours worked and require that the employee obtain permission to work in excess of those hours.

QREIOE

[15] The QREIOE also opposed the removal of part-time employment arrangements for commission-only employees and took issue with the provisional view of the Full Bench that such arrangements are neither useful nor relevant for commission-only employees. The QREIOE contended that the experience of its members was contrary to the provisional view of the Full Bench and that two matters were at the forefront of its position. Firstly, full-time commission-only salespersons around the age of 65 look towards semi-retirement but want to maintain a connection with the industry and with clientele they have built up over the years. Similarly where owners of real estate agencies wish to sell their businesses, they are likely to want to retain contact with clients but may not want to work full-time for the acquirer of the business and seek to work on a part-time commission-only basis while maintaining their skills. Secondly, part-time commission-only arrangements permit flexibility for parents with school age children to remain in the workplace and work around their parental responsibilities.

[16] The QREIOE also submitted that real estate activity in Queensland tends to be concentrated on weekends and that part-time commission-only employment is a “natural adaptation to this occurrence”. The provisional view of the Full Bench assumed that part-time commission-only employees would be required to work outside their part-time hours but, it was submitted, this would not be permitted under the written employment agreements entered into by such employees, which should state their part-time hours. It was further submitted that if the Full Bench had concerns in this regard, it could vary the REI Award so as to prevent part-time commission-only employees from working outside of their agreed hours.

[17] The QREIOE submitted that a commission-only salesperson transitioning from full-time to part-time employment would probably not have difficulty meeting the minimum income threshold but may have difficulty in subsequent years given the threshold amount is geared to full-time employment. According to the QREIOE it would seem reasonable for the amount to be reduced on a pro-rata basis to take account of hours worked by part-time employees.

[18] In support of its submission, QREIOE filed a witness statement made by its Secretary/Treasurer, Mr Bruce Siebenhausen. 7 In that statement Mr Siebenhausen said that he has communicated to members of the QREIOE that this matter is before the Commission and the overwhelming response from members who have contacted him has been support for allowing part-time commission-only employment.

[19] Mr Siebenhausen was cross-examined by Mr Clark on behalf of the RRESSA. He accepted in cross-examination that some employers of part-time commission-only salespersons keep time books recording actual hours worked and some do not. Mr Siebenhausen also said that those who did not keep track of such hours did not think that they were obliged to do so. Mr Siebenhausen said that he had not surveyed his members in relation to time-keeping practices, and his view about whether this was done or not was merely an assumption. Mr Siebenhausen said that he did not know how the employers his organisation represents calculate entitlements for annual leave or personal leave.

[20] Mr Siebenhausen agreed that his evidence was to the effect that if the Full Bench removed the ability for commission-only salespersons to enter into part-time employment arrangements, then sales agents with family responsibilities or who were retiring would be prevented from working in the industry.⁸ Mr Siebenhausen also agreed that employees who wished to work less than full time hours could be employed on a part-time or casual basis under the current provisions of the REI Award other than on a commission-only basis, and that he could not think of a reason why an employer would not agree to such a proposal other than a general preference for commission-only employment.⁹ In response to why his members had concerns about the removal of part-time provisions for commission-only employees, Mr Siebenhausen said that employers have favoured commission-only employment and rejected the proposition that the only reason for this was that they did not wish to pay a guaranteed minimum rate of pay to employees.¹⁰

[21] The QREIOE also sought and was granted an opportunity to file a proposed amendment to the REI Award to give effect to aspects of its submission. The proposed amendment sought by QREIOE can be summarised as follows:

•  a requirement would be added to the REI Award that where a commission-only employee is employed on a part-time basis (i.e. with average weekly hours less than 38), then the average of such weekly hours must be stated in the written agreement that the employee enters into in relation to commission-only arrangements;

•  hours worked outside of the average weekly hours stated in the written agreement at the “specific direction” of the employer would be paid for at the ordinary hourly rate calculated by dividing the weekly rate by 38;

•  “specific direction” would be defined to mean that the employee was given an express instruction to perform work in excess of the employee’s average weekly hours as stated in the employee’s written agreement;

•  employees would not be entitled to additional payment for hours in excess of those in a written agreement where such hours are worked at the initiative of the employee (i.e. without express direction from the employer);

•  disputes in relation to whether an employer issued a specific direction would be dealt with under the dispute settling procedure in the REI Award; and

•  hours worked by part-time employees outside of the hours specified in their written agreement and in accordance with a specific direction from the employer would be required to be recorded by the employer with seven days of being worked.

Employer responses to the QREIOE proposal

[22] The proposal advanced by the QREIOE was opposed by the REEF and the REEF SA/NT. The REEF opposed the QREIOE proposal on the basis that it would require a mandatory record keeping regime for the hours worked by commission-only employees, presumably for both part-time and full-time employees. This would be a diminution of commission-only employment, the very fabric of which is built around:

•  the ability of commission-only salespersons to command a higher share of the employer’s commission than salaried salespersons; and

•  the flexibility enjoyed by commission-only employees with greater control over their personal working arrangements on the basis that they are essentially conducting a business within a business and wish to have the freedom to work when they want to.

[23] The REEF also submitted that remuneration for commission-only salespersons has always been “results based” not “time based”, and that a major feature of commission-only employment is the flexibility of not being required to keep a track of hours worked by such employees. The QREIOE proposal is said by the REEF to have the consequence of introducing an hourly rate of pay where an employee works in excess of contracted ordinary hours, which would alter the fabric of commission-only employment and undoubtedly extend to full time commission-only employees working in excess of 38 ordinary hours.

[24] The REEF SA/NT’s opposition to the proposal advanced by QREIOE was also on the basis that commission-only employees are rewarded on the basis of results, not time, and that the introduction of an hourly rate of pay for part-time commission-only employees would be inconsistent with the purpose of commission-only employment arrangements. The REEF SA/NT further submitted that the QREIOE’s proposal to impose a mandatory record keeping regime and hourly rate of pay for time worked beyond contracted hours for part-time commission-only employees would diminish the flexibility enjoyed by those employees and contradict the purpose of commission-only employment.

[25] Correspondence in the nature of a submission was also received from Mr Andy O’Neill, a property consultant from Western Australia. Mr O’Neill asserted that he works under a contract providing for ten hours per week, and that in some weeks he works his contracted hours and in other weeks works “far more” than those hours. According to Mr O’Neill this suits his lifestyle and income needs, and there are a large number of sales representatives with the same view including semi-retired salespersons such as Mr O’Neill and mothers with young families. Mr O’Neill asserted that the provisional view of the Full Bench - which Mr O’Neill describes as “no allowance for part-time or casual employees” - is “ridiculous”. Mr O’Neill also asserted that if the Full Bench removes the ability for commission-only salespersons to be engaged on a part-time basis, he will be dismissed along with approximately 30-40% of the sales representatives in Western Australia.

RRESSA

[26] The RRESSA supported the provisional view of the Full Bench and agreed that part-time employment arrangements are “neither useful nor relevant for commission-only employees”. The RRESSA submitted that our decision of 29 March 2018¹¹ made it clear that casual commission-only employment was not to be permitted, and the same outcome should apply with respect to part-time commission-only employment. According to the RRESSA the REI Award allows commission-only salespersons to work very flexible working hours already and they are excluded from a number of award benefits because of their employment status including car and telephone allowances and overtime. While commission-only employees have a right to a 38 hour week, if they exceed these hours even on the instruction or with the permission of the employer they are not able to claim overtime rates of pay.

[27] The RRESSA also identified difficulties in calculating NES entitlements for part-time commission-only employees, given that such entitlements are generally based on the employee’s base rate of pay for the number of ordinary hours worked each week and commission-only employees have neither a base rate nor ordinary hours. The RRESSA also submitted that the Fair Work Regulations 2009 (FW Regulations) in relation to the keeping of employee records would not adequately protect the interests of part-time employees if they were permitted to be employed on a commission-only basis. In the case of pieceworkers under any other modern award, the hours of work would be recorded, and this was to be contrasted with commission-only employees in the real estate industry, who only earn their income on the sale or lease of properties regardless of the number of hours worked. In relation to the submissions of the employers to the effect that retired persons or those with parental responsibilities utilise part-time employment, the RRESSA contended that there was no impediment to those employees working less than full time hours on the basis that they are paid for the hours worked. The RRESSA also pointed to the fact that the REI Award provided that the employer and employee are free to agree to a commission share whereby casual wages and allowances can be offset against the employee share of any commission agreed to. Further, the employer and the employee can agree that the employee work part-time as a wages employee on a debit/credit system whereby the employee is guaranteed a minimum hourly rate of pay and pro rata accrued benefits such as annual leave.

[28] The RRESSA contended that the only reason that an employer would prefer to have part-time commission-only employees is that they are not bound to pay them a minimum wage for their full NES entitlements, but that was not a reason which justified potential widespread abuse in a safety net award and was contrary to the objects of the FW Act and the modern awards objective. If part-time commission-only arrangements were in effect, an employer could reach agreement with a salesperson to work less than 38 hours per week and pay NES entitlements on that basis, regardless of the actual hours worked by the employee. It was submitted that while an employment agreement may nominate part-time hours, there was no requirement that these would be the hours actually worked. In truth, it was submitted, commission-only employment was structured around salespersons working on a full time basis on any of the seven days in a week and at various hours of the night to track down properties and list them, and salespersons could not make a living wage without working at least full-time hours.

[29] The RRESSA opposed the QREIOE proposal and asserted that it was unworkable, not supported by legislative provisions in relation to record keeping, and did not address the concerns of the Full Bench as expressed in its provisional view. Further, the RRESSA contended that until commission-only salespersons have an effective hours clause with 38 hours per week being the maximum allowable ordinary hours and provision for overtime payments and the recording of accurate real time hours of work, any proposal to allow the employment of part-time commission-only salespersons was neither useful nor relevant. This was particularly so given that the wishes of employers and employees to implement part-time working arrangements can be easily accommodated by the existing award provisions. The RRESSA also opposed the proposal by the REEF SA/NT and the QREIOE to the MITA being pro-rated for part-time commission-only employees.

APSA

[30] The submissions of the RRESSA were supported by the APSA, which also submitted that it was aware of salespersons working no set hours being successfully employed on a casual basis and paid as provided for in the REI Award on a debit/credit arrangement. The APSA contended that part-time commission-only employment was unnecessary and unworkable with the availability of casual employment as provided for by the REI Award.

[31] The APSA also opposed the QREIOE proposal and maintained that ample provision already existed for part-time and casual employment in the REI Award. In relation to the employer parties seeking part-time commission-only provisions in the REI Award to accommodate semi-retired salespersons or persons with family responsibilities, the APSA submitted that the QREIOE proposal would require such employees to have a written agreement stating the average number of hours they would work. The APSA believed that a large number would not work or wish to work a consistent number of weekly hours over a period of time. Further, the APSA pointed to the QREIOE proposal for payment at the minimum hourly award rate for additional hours requested by the employer, and submitted that this would most likely trigger a debit/credit provision in any written agreement. The APSA also submitted that the QREIOE proposal did not mention what the consequence would be if an employee did not work the agreed number of hours or identify the period over which the average hours would be calculated. The QREIOE proposal did not contemplate or provide for time keeping or similar records and would provide at best for inconsistency and at worst rorting of NES entitlements. The door would also be opened for employers to seek to pro-rata the MITA for entering into commission-only employment, which was opposed by APSA.

Additional issue

[32] During the hearing an additional matter arose relating to the need to clarify the wording in clause 16.3(a)(iii) of the REI Award (clause 9.7(c)(i) of the Exposure Draft) in relation to the requirements for entering into commission-only employment. In written submissions following the hearing the parties advised that they had reached agreement on the wording for the clause. The agreed wording of clause 16.3(a)(iii) is as follows:

“The employee has been engaged in property sales or commercial, industrial or retail leasing as a Real Estate Employee Level 2 or higher with any Licenced Real Estate Agent, or has operated his or her own real estate business, for at least 12 consecutive months in the 3 years prior to entering into a commission-only agreement”.

[33] The parties have also agreed that a new clause 16.3(b) should be inserted in the following terms:

“For the purpose of clause 16.3 the words “real estate business” must have been one which was involved in the sale of real property or businesses.”

Consideration

[34] The general principles applicable to the conduct of the 4 yearly review have been stated in a number of Full Bench decision and were recently summarised in Alpine Resorts Award 2010. 12 We adopt and apply those principles here.

[35] Commission-only employment arrangements under clause 16 of the REI Award provide for a system of payment by results and are not time based. Clause 16.5 excludes commission-only employees from the provisions of the REI Award concerning, among other things, minimum weekly wages, allowances and overtime. Although clause 23, which provides for 38 ordinary hours of work for full-time employees, applies to commission-only employees, this is purely notional. There is no actual limit on the hours of work in a day, a week, a month or a year for commission-only salespersons. Neither is there a prescribed daily spread of hours in which ordinary hours may be worked. Commission-only employees may carry out work on any or all of the days of the week. The amount which commission-only employees are required to be paid bears no relationship to how many, or how few, hours they work. By virtue of clause 17.5 of the REI Award, NES entitlements for commission-only employees are calculated not by reference to hours but by reference to the base rate of pay, being the minimum wage in clause 14.1 of the Award for the employee’s classification level.

[36] The fact that commission-only employees have no entitlement to overtime, or to any additional payment at all, for hours worked in excess of 38 per week has important consequences for the record-keeping requirements for such employees which employers must comply with. Under Pt 3-6 Div 3 of the FW Regulations, there is no obligation upon an employer to keep a record of the hours worked by an employee unless the employee has an entitlement to a penalty rate or loading for overtime hours actually worked (see reg 3.34). 13 Accordingly employers are not required to keep any record of the number of hours worked by commission-only employees.

[37] As a matter of general principle, ordinary hours of work for part-time employees must be less than those for full-time employees. Part-time hours are a proportion of full-time hours, and the proportion of part-time hours to full-time hours is the basis for calculating the NES entitlements for part-time employees. However in respect of commission-only employees under the REI Award, because for all practical purposes there are no defined full-time hours, there is no benchmark for the engagement of employees on part-time hours. Accordingly no practical content can be assigned to an arrangement to engage a commission-only employee on a part-time basis. There is simply no basis by which the number of hours actually worked by such an employee can be confined to or even bear any relationship to the notional agreed number of part-time hours.

[38] In any event, if the purpose of commission-only arrangements for salespersons is flexibility and incentivisation, then to impose a maximum number of hours that a part-time commission-only salesperson may work defeats that purpose. Further, as a matter of logic, if it was possible for a part-time commission-only salesperson to be confined to working no more than the agreed number of part-time hours, then the same requirement would be applied to full-time commission-only salespersons so that they could not work more than 38 hours per week. No party supports that proposition even in theory, let alone practice, since it would defeat the purpose of commission-only employment. That is demonstrative of the fact that ordinary hours of work for a commission-only salesperson, whether full-time or part-time, is a fiction.

[39] We are also of the view that to allow commission-only salespersons to be employed on a part-time basis would result in significant difficulty for such employees to access their NES entitlements. In this regard we note the submissions of the REEF SA/NT and the QREIOE and the evidence of Mr Siebenhausen on behalf of QREIOE. In effect, the proposal advanced by the employers is that commission-only salespersons would enter into written agreements to work less than full time hours each week. How hours that are less than full time can be quantified for part-time commission-only salespersons in circumstances where there are, for all practical purposes, no maximum ordinary full time hours for commission-only salespersons was not explained. The QREIOE proposal would involve an additional hourly payment for commission-only salespersons employed on a part-time basis who are directed by their employer to work hours in excess of contracted part-time hours. While such an entitlement would give some content to the concept of part-time hours for commission-only employment, it is problematic in a number of respects. First, if such an entitlement is created for part-time commission-only employees, there is no reason in logic why it should not also apply for full-time employees. Second, it does not deal with additional hours worked by the employee without there being a specific employer requirement to do so. The whole concept of commission-only remuneration system is that employees will be incentivised to perform the work necessary to obtain a sale, regardless of any notional hours of work attaching to their employment. Third, no explanation has been advanced as to how such a direction would be documented or recorded, and in effect the provision would be unenforceable. Finally, the QREIOE proposal was opposed by all other employer parties, who recognised that it would potentially deprive them of much of the perceived benefit of part-time commission-only employment, namely the ability to require such an employee to work any hours at all without any additional cost to the employer.

[40] The assertion of the REEF SA/NT that part-time commission-only employees would not work in excess of the hours in their contracts is not supported by any evidence and is counter-intuitive. The REEF SA/NT referred to template contracts said to be used by its members to implement part-time commission-only employment arrangements and stated that those contracts contain provisions requiring employees to seek permission to work in excess of their contracted part-time hours. Such arrangements, even if they are in place, do not address the fact that commission-only employees may work in excess of such hours without permission or direction and receive no additional payment for doing so. Further, no employer party proposed any award provision which would contain a requirement of this nature, so such template contracts remain purely voluntary. We also note the opposition of the REEF SA/NT to the QREIOE proposal, which is difficult to reconcile with its primary submissions about part-time commission-only employment and evidence the difficulty associated with imposing a time-based framework on commission-only employment arrangements.

[41] We have earlier referred to there being no requirement under the FW Regulations to keep records of hours worked by commission-only salespersons, whether full-time or part-time, because of their lack of any overtime entitlements. We also note Mr Siebenhausen’s evidence that employers do not regard themselves as required to keep records of hours worked by commission-only salespersons and probably do not keep such records. No employer party proposed an award provision by which employers would be required to keep the records of hours worked by commission-only employees, and indeed such a concept was strongly opposed by the employer parties. However, absent such a requirement, there is simply no way of monitoring whether the hours of work that might actually be performed by a notionally part-time commission-only employee conforms with or bears any relationship with the agreed number of part-time hours.

[42] The proposition that hours of work for commission-only salespersons can be divided into hours they are specifically directed by the employer to work and hours they choose to work is self-evidently flawed. While the overtime provisions of clause 24 of the REI Award make this distinction with respect to employees on weekly wage rates, such employees also work an average of 38 hours per week so that ordinary hours and overtime hours can be distinguished. This has never been the case for commission-only salespersons, and to introduce such a provision for commission-only salespersons working part-time hours is inconsistent with the concept of commission-only employment under the REI Award and the manner in which commission-only salespersons have always worked.

[43] It is also the case that real estate salespersons working under commission-only agreements are not working solely for their own benefit. The employer also derives a financial benefit from every property sold. We do not accept that employment agreements for commission-only salespersons could restrict the hours of work for those salespersons to a specified number, in either a practical or legal sense. Work performed by commission-only salespersons in excess of those in part-time employment agreements will financially benefit their employers where the result is that a property is sold. However if the position advanced by the employer parties was accepted, commission-only salespersons who work hours in excess of their notional part-time hours would not receive NES entitlements in respect of those hours, regardless of whether they were directed to work them or not and irrespective of whether the employer gains a financial benefit from the working of such hours. That strikes us as being fundamentally unfair. It means that NES entitlements will be paid for by reference to an entirely notional number of part-time hours that it is likely to bear no relationship to the number of hours actually worked.

[44] The REI Award already makes provision for part-time employment other than on a commission-only basis, and such provisions may be utilised to engage real estate salespersons on a part-time basis to meet their needs. The REI Award provides for employers to enter into written agreements for commission payments to be made in addition to the minimum weekly wage under the Award and these agreements are used in the real estate industry to offset the requirement to pay the minimum weekly wage rate to employees by way of a debit credit system. Such arrangements can be applied to part-time employees under the current provisions of the REI Award.

[45] Further, the REI Award provides that written agreements between the employer and employee for bonus or incentive payments may be entered into. There is no reason why such arrangements could not be utilised in the case of salespersons transitioning to retirement or with family responsibilities, to implement part-time employment arrangements while retaining the ability for such employees to earn commission, bonus or incentives. This would provide adequate protection to those part-time employees in terms of their ordinary hours, overtime hours and NES entitlements while providing a performance based incentive.

[46] The submissions of the employer parties and the evidence of Mr Siebenhausen have reinforced our provisional view that part-time employment concepts are neither useful nor relevant for commission-only employees and we have concluded that the REI Award should contain a provision that prevents commission-only employees from being employed on a part-time basis. The debate between the employer parties about how our concerns arising from our provisional view about the usefulness or relevance of such arrangements for commission-only employees could be addressed has also confirmed that view and demonstrated that the practical difficulties associated with commission-only employees working part-time are insurmountable.

[47] In reaching this conclusion we have had regard to the modern awards objective in s 134(1). We have concluded that the REI Award, together with the National Employment Standards, would not provide a fair and relevant minimum safety net of terms and conditions of employment if the REI Award provided for commission-only salespersons to be employed on a part-time basis when the considerations in s 134 of the Act are taken into account. No particular primacy is attached to any of the s 134 considerations and not all of the matters will necessarily be relevant to a particular proposal to vary an award. In the present case, with respect to s 134(1)(a) of the Act, relative living standards and the needs of the low paid are not a relevant consideration in determining the matter we are dealing with in these proceedings. The need to encourage collective bargaining which we are required to take into account in accordance with s 134(1)(b) is also not relevant to the present case.

[48] Taking into account the consideration in s 134(1)(c) the inclusion of part-time provisions for commission-only salespersons in the REI Award is not necessary to meet the modern awards objective having regard to the need to promote social inclusion through increased workforce participation. The fact that the REI Award provides for part-time employment for employees who are not on commission-only arrangements while at the same time providing for those employees to enter into commission, bonus or incentive arrangements in addition to their weekly wages, is sufficient to encourage increased workforce participation while avoiding the issues we have identified with respect to part-time arrangements for commission-only employees.

[49] These existing provisions are also consistent with the objective of maintaining a fair and relevant minimum safety net through the modern award and NES having regard to the consideration in s 134(1)(d) of the need to promote modern work practices and the efficient and productive performance of work. The REI Award provides for part-time employment for employees other than those on commission-only arrangements in a manner that ensures that they will receive their full NES entitlements based on the number of ordinary hours worked. The REI Award also provides for such employees to receive commission, bonus or incentives in addition to the minimum rates in the REI Award for the hours worked as a mechanism to improve productivity and flexibility. We also note that the part-time provisions of the REI Award are not prescriptive with respect to maximum and minimum hours of work on a daily or weekly basis for part-time employees and simply provide that such employees work less than an average of 38 hours per week. In short, the part-time provisions in the REI Award are very flexible and are less prescriptive than those found in other modern awards.

[50] We do not accept that part-time provisions for commission-only salespersons will promote flexible modern work practices and the efficient and productive performance of work, and to allow such arrangements would result in the REI Award not being fair or relevant because of the adverse impact on the NES entitlements of such employees. In relation to s. 134(1)(da), it is our view that to include provisions in the REI Award for commission-only salespersons to be employed on a part-time basis would not result in the REI Award providing fair and relevant minimum safety net taking into account the need to provide additional remuneration for employees working overtime or on weekends or public holidays. This is because there would be nothing to prevent part-time employees working hours in excess of their agreed hours with no additional remuneration on the basis that the hours were not “directed” and with the further disadvantage that such employees would receive reduced NES entitlements which are not based on actual hours worked.

[51] The principle of equal remuneration for work of equal or comparable value (s 134(1)(e)) is not relevant in the present case and the removal of part-time employment provisions for commission-only salespersons will have no impact in this regard.

[52] We are also of the view in respect of the s 134(1)(f) consideration that the regulatory provisions which it would be necessary to include in the REI Award to support part-time employment arrangements for commission-only employees would adversely impact both the employers and employees concerned, Presently there is no requirement for recording of hours for commission-only employees or provision for such employees to work an agreed number of hours each week. There is also no provision for payment for such hours. Such requirements would be necessary to ensure that the safety net provided by the REI Award and the NES could function in the event that the award provided for commission-only salespersons to be employed on a part-time basis. They would impose a burden on employers and employees which would negate any benefit from the employment of commission-only salespersons on a part-time basis.

[53] Further, such requirements would be far from simple or easy to understand and would probably not be complied with, if the evidence of Mr Siebenhausen on this point is accepted. For these reasons, to retain part-time provisions for commission-only salespersons in the REI Award would not be consistent with the need to provide a fair and relevant minimum safety net of terms and conditions in terms of productivity, employment costs and the regulatory burden for business, as provided in s 134(1)(f). Neither would retaining such provisions be consistent with the need to ensure a simple, stable and sustainable modern award system as provided in s 134(1)(g).

[54] Variations to the REI Award to make clear that commission-only salespersons must not be employed on a part-time basis would not impact on employment growth, inflation and the sustainability, performance and competitiveness of the national economy as provided in s 134(1)(h). Such variations would meet the requirements of s 136 of the Act and, given our views in relation to the considerations in the modern award objective that we are required to take into account, such variations would also result in the REI Award including terms only to the extent necessary to achieve the modern awards objective as required by s 138 of the Act.

[55] It would also be inconsistent with the objects of the Act for the REI Award to provide for employment arrangements which would enable employees to work hours in excess of or outside agreed part-time hours while limiting their NES entitlements to agreed hours. This would be the case even if we were to allow part-time employment for commission-only salespersons without varying the REI Award to allow the MITA for entering into commission-only employment to be pro-rated.

[56] Finally, we do not accept that it is relevant that the variation of the REI Award to remove the ability of employers to employ commission-only salespersons on part-time arrangements was a matter initiated by the Full Bench rather than the parties. The Commission in the 4-yearly review is not constrained by the terms of a particular application and may vary a modern award in whatever terms it considers appropriate, subject to the obligation to afford the parties procedural fairness. The parties in the present case have had numerous opportunities to make submissions in relation to this matter and have availed themselves of that opportunity. There is no suggestion that the parties have been denied procedural fairness.

Conclusion

[57] We have decided to vary the REI Award to remove the applicability of part-time employment provisions to commission-only salespersons. This will be done by:

(1) varying the last sentence of clause 16.1 to read: “An employee paid on a commission-only basis must not be engaged as a part-time or casual employee”;

(2) varying clause 16.3(a)(v) so that it provides: “the employee is not engaged as a part-time employee, a casual, a junior, a Real Estate Employee Level 1 or a trainee;…”; and

(3) varying clause 16.5(a) to read “clause 10.3 - Part-time employment”.

[58] Given the significant issues with the operation of part-time employment that we have identified, we are not prepared to “grandfather” preserve existing part-time arrangements. We accept that a phasing in period is required notwithstanding the notice that parties have had about our concerns in relation to this matter. Accordingly, the amendment we intend to make to the REI Award in this regard will take effect from 30 June 2019. In our view this will give the parties to part-time employment agreements in the commission-only space adequate time to align them with Award and NES requirements and obligations.

[59] We have also decided to vary clause 16.3 of the REI Award as proposed by the parties effective from 30 April 2019. Clause 16.3(a)(iii) will be varied in the terms proposed by the parties. The drafting of the proposed new clause 16.3(b) will be adjusted so that it reads as follows:

“For the purpose of clause 16.3(a)(iii), “real estate business” shall mean a business involved in the sale of real property or businesses.”

[60] The existing clause 16.3(b) will be redesignated as clause 16.3(c).

VICE PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR707132>

 1   The review was initially conducted pursuant to s 156 of the Fair Work Act 2009. Section 156 was repealed by the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Act 2018 effective retrospectively from 1 January 2018, but clause 26 of Schedule 1 to the Fair Work Act (which was added by the amending Act) requires the Commission to continue to apply s 156 to the current review as if it had not been repealed. 

 2   [2017] FWCFB 3543

 3   Ibid at [107], [131]

 4   [2018] FWCFB 354 at [29]

 5   PR601130

 6   See [2018] FWCFB 1882 at [9]-[14]

 7   Statement of Bruce Siebenhausen – Exhibit “BS”.

8 Transcript 12 November 2018 PN54

9 Transcript 12 November 2018 PNs56-59, PN73

10 PNs68-70

11 [2018] FWCFB 1882.

 12   [2018] FWCFB 4984 at [52]

 13   See Annualised Wage Arrangements [2018] FWCFB 154 at [123]-[124]