Warning on commission payments after FWO orders $10,000 back pay for real estate agent

Employers have been warned to check commission payments to staff after the Fair Work Ombudsman recovered $10,300 for a Melbourne real estate agent who was underpaid as part of an unlawful employment arrangement.

The agent was a recent Sri Lankan immigrant in his 50s and was employed by McDonald Real Estate in Dandenong.

McDonald Real Estate directors, John and Le Hoa Wysham of Aspendale, also operate other real estate agencies in Melbourne.

An investigation by the FWO found the real estate agent was initially unlawfully required to perform four weeks of unpaid work under a purported ‘training program’.

Over the next three months, he was paid $551 a week as an ‘advance against future commissions’, plus a car allowance of $115 a week.

However, the retainer was cancelled after about three months and the real estate agent was paid only the $115 weekly car allowance for a month before he was made redundant.

Under the Real Estate Industry Award 2010, commission-only arrangements are applicable only when it can be demonstrated that an employee has earned more than the minimum wage payable under the Award selling real estate in any 12-month period over the preceding five years.

As the estate agent did not fit into this category, the FWO found McDonald Real Estate should have paid wages of at least $557 a week throughout his employment.

The Fair Work Ombudsman investigated the matter after the estate agent lodged a complaint.

The Wyshams admitted being involved in the underpayment and as an alternative to litigation back paid the real estate agent $10,300 and entered into an Enforceable Undertaking with the FWO.

As part of the Enforceable Undertaking, the Wyshams agreed to donate $1,000 to the Peninsula Community Legal Centre; make a formal written apology to the underpaid real estate agent; and develop processes for ensuring future compliance with workplace laws for all real estate agencies they are involved in and provide evidence of the measures to the Fair Work Ombudsman

The Wyshams also agreed to undertake a professional audit of all their real estate agencies and rectify any underpayments identified and conduct further compliance audits for the next three years.

They are to provide professional workplace relations training for all managerial, human resources, recruitment and payroll staff for the next three years, publish a public notice detailing the contraventions of workplace laws on the McDonald Real Estate website and in the Dandenong Leader and Melbourne Weekly newspapers, and display the notice at the premises of all their real estate agencies.

SmartCompany contacted the Wyshams but they declined to comment.

Fair Work Ombudsman Nicholas Wilson said that in cases of significant non-compliance, Enforceable Undertakings are being used as an effective alternative to litigation.

“They are an important part of our agency’s commitment to drive future compliance and help us remain confident we are upholding the provisions of the Fair Work Act,” he said.

Workplace relations lawyer Peter Vitale, told SmartCompany employers needed to be careful of commission only arrangements unless the employee is earning substantially above the minimum.

“In any field where payment by commission is the usual practice it’s commonly the case that employers are not fully aware that they do have minimum wage obligations that take precedence over any commission arrangements,” he says.

“So it is important for employers in those circumstances to ensure that when they put the employment arrangements in place that they are aware that they do have these obligations and that the arrangements adequately deal with the fact that they will have to pay a minimum before any commission arrangement can take precedence.”