Placing employees on a Commission only agreement is quite common in business and especially in the real estate world.
The definition of a commission-only payment is defined by Fair Work as:
“You only get paid if you sell or lease properties. Your payments are based on how many properties you sell or lease.”
There are some benefits to having an employee on a Commission Only Contract:
- Incentivise the employee to work harder at achieving their targets
- Uncapped – an employee can earn as much as they work at achieving and exceeding their targets
- The employee is forced to be more self-disciplined in completing their duties
Commission only is all fun and games until you don’t follow the award to the “T”; it can get really messy.
There are strict guidelines in place to make sure that the employee is protected, fairly treated, and has entered into an agreement properly.
Keep in mind, if you get it right the first time, there won’t be any issues and it will be smooth sailing from there!
Here are some key points from the Real Estate Industry Award that you need to know before placing someone on a commission-only contract:
- A person can only enter into a commission-only contract when specific criteria have been satisfied
- Written agreement
- Issued with a real estate licence
- At least 21 years of age
- Minimum Income Threshold Amount (MITA) – has your employee met the minimum wage requirements?
- Must be at a classification level 2 or higher
- Certain Clauses do not apply to a commission-only employee
- Part-Time and Casual – (meaning you cannot employ someone on a commission-only contract on a part-time or casual basis)
- Annual leave loading
There is a lot of intricate details that come into play when making a commission-only contract, wages are the main thing. As also outlined in the award, you need to make sure that the minimum commission-only rate is calculated as 31.5% of the employer’s gross commission.
Sound like a whole bunch of technical jargon? Don’t stress about a thing!
Give Key Business Advisors a call on 1300 4 ADVICE and we can take care of all things commission only.
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