'Foolish' principals likely target of govt audit

Simon Parker

The "foolish" minority of principals that have failed to document commission-only employment arrangements are likely to be the primary targets of a Fair Work Ombudsman probe into the real estate industry, the Real Estate Employment Federation of NSW (REEF) has said.

“Quite frankly, that’s foolish business practice,” Mark Patterson, executive director at REEF, told Real Estate Business.

Mr Patterson was commenting in relation to a recently launched Fair Work Ombudsman investigation that will seek to ensure principals are paying their staff their full entitlements, including minimum pay and penalty rates.

The two-month campaign will focus on 350 real estate agencies in NSW.

According to Mr Patterson, the Fair Work Ombudsman was in close contact with REEF in relation to the investigation, and he praised the government body for delaying the investigation until after the Christmas break.

He said it was unlikely that Fair Work will uncover many principals who weren’t meeting their responsibilities, at least based on the 1,500 organisations that are REEF members. Mr Patterson estimated that the REEF membership base represented around 70 per cent of the NSW real estate agency market.

He said the investigation was, “in general, reasonably fair” in terms of what it sought from principals. “It’s not terribly onerous,” he said.

He added that letters were sent by Fair Work to the 350 principals on January 9, so all those being targeted for an audit should know by now.

Mr Patterson said it wasn’t uncommon for principals to have some misunderstandings around commission-only employment rules. One area where they might come unstuck centred on the requirement for employees to show proof to an employer that they have the ability – based on past earnings – to generate enough money on a commission-only basis to surpass a minimum income threshold.

Fair Work said it had selected 120 real estate agents in metropolitan Sydney and 230 in regional NSW for audits.

Areas of Sydney included in the campaign are Blacktown, Bondi, Bronte, Burwood, Camden, Campbelltown, Caringbah, Carlton, Castle Hill, the CBD, Chatswood, Hurstville, Ingleburn, Leichhardt, Liverpool, Manly, Maroubra, Miranda, North Sydney, Padstow, Parramatta, Penrith, Port Macquarie, Potts Point, Pyrmont, Randwick, Rockdale, Strathfield, Sutherland and Thornleigh.

Regional areas include Dubbo, Gosford, Newcastle, Lismore, Nelson Bay, Nowra, Orange, Terrigal, The Entrance and Wollongong.

“Fair Work inspectors will check that agencies are paying employees correctly, with a particular focus on ensuring salespeople paid on a commission-only or part-commission basis are receiving their full entitlements,” the organisation said.

“Inspectors will also check that reception and administrative staff are being paid their full entitlements, including minimum pay rates and penalty rates.”