The Fair Work Commission granted the employers' request to temporarily adjust how the Minimum Income Threshold Amount (MITA) is calculated for commission-only real estate employees, allowing the months May to October 2020 to be disregarded for annual reviews, to avoid pandemic-related distortions that could otherwise force employees off commission-only arrangements. The Commission refused an employee group's proposals to stop employers debiting JobKeeper-funded wages against commission and to require commission-only employees be paid minimum wages during a set period, finding those changes would improperly override agreed over-award arrangements, undermine the JobKeeper scheme, and lacked sufficient evidentiary support. The Commission did impose a limited moratorium on new commission-only agreements from 6 August to 30 October 2020 to match the period of the temporary MITA adjustment.

What happened

Two related applications to vary the Real Estate Industry Award 2020 were before the Fair Work Commission in mid‑2020, both developed as responses to the economic disruption caused by the COVID‑19 pandemic.

The employer bodies (Real Estate Employers' Federation (REEF), Real Estate Employers' Federation of South Australia and Northern Territory (REEFSANT) and supporting REEFWA) sought a temporary Schedule I to the Award permitting the months May, June, July, August, September and October 2020 to be disregarded when calculating the Minimum Income Threshold Amount (MITA) for the annual review of commission‑only employees (see [2], [13]). The objective was to avoid commission‑only employees being removed from those arrangements due solely to the pandemic‑related collapse or diminution of sales activity (see [14]–[16]).
An employee representative (RRESSA, via Nathan Fox) filed an application seeking a different set of temporary protections: (a) prohibit employers from debiting JobKeeper payments against employees' commission entitlements (the JobKeeper claim); (b) require commission‑only employees to be paid at least the annualised minimum wage for the period 30 September 2020–1 October 2021 (the commission‑only claim); and (c) prohibit new commission‑only arrangements until 1 October 2021 (the prohibition claim) (see [3], [22]).

The Commission heard the matters together (written submissions and an oral telephone hearing) because of the overlap and urgency created by the pandemic (see [5], [6]). The bench comprised Vice President Hatcher, Deputy President Asbury and Commissioner Spencer.

The Commission granted the REEF variation (Schedule I), refused RRESSA's JobKeeper and wage‑guarantee claims, but granted a limited moratorium on new commission‑only agreements prospectively from 6 August 2020 until 30 October 2020 (see [57], [66]–[67], [87]).

Why the court decided this way

The decision rests on the statutory framework for varying awards and the evidence (and lack of evidence) presented.

Statutory framework and standard of review

The power to vary a modern award is in ss 157–158 of the Fair Work Act 2009. The Commission may only vary an award if satisfied the change is necessary to achieve the modern awards objective, which requires it to take account of the s 134(1) considerations (the composite safety‑net objective) (see [53]–[56]).
Where variations are not self‑evident the applicant must produce probative evidence to justify a departure from the award's existing structure (see [62]).

Why REEF's proposed Schedule I was accepted

The Commission accepted that COVID‑19 produced extraordinary market effects that were not foreseen when the MITA was established. Including the pandemic peak months in the MITA review could, therefore, improperly result in removal of otherwise qualifying commission‑only employees from those arrangements, which in turn might place their continued employment at risk. That risk made the modest, targeted adjustment necessary to meet the modern awards objective in the particular circumstances (see [14], [16], [57], [75], [76]).
The variation was seen as consistent with the Award's structure: it did not substantively reconfigure commission entitlements or generally alter the Award, but provided a temporary, tailored fix to the annual review mechanism (see [57], [83]).

Why RRESSA's claims were refused

The Commission emphasised that wage‑plus‑commission and commission‑only schemes are largely over‑award arrangements; the Award prescribes procedural requirements (writing, accountings, reviews) but leaves the substantive quantum and timing of commissions to the parties (see [59]).
The JobKeeper claim would have prohibited employers from debiting amounts salaried to employees (including JobKeeper payments) against commission entitlements. The Commission held that this would effectively remove the employer's intended benefit of JobKeeper, thereby undermining the Commonwealth subsidy scheme and its rationale; it would also intrude into over‑award contractual space without cogent evidence that such intervention was necessary (see [63]–[66]).
The wage guarantee claim sought to convert commission‑only employment into a guaranteed‑wage model. That would be a substantive overhaul of the Award’s treatment of commission‑only arrangements; the Commission found insufficient probative evidence to justify such a transformation (see [62], [66], [76]–[78]).

Why the moratorium on new commission‑only engagements was imposed

Once the Commission accepted a temporary adjustment to how MITA reviews would operate, it considered it incoherent to allow new persons to be taken onto commission‑only terms during the same unusual period when the rules for assessing continuation were softened. A short prospective moratorium aligned with the Schedule I period (practicably from 6 August to 30 October 2020) was therefore appropriate and proportionate (see [67]).

Before and after state of the law

Before

The Award already contemplated two distinct remuneration approaches: (a) wages plus commission/bonus/incentive arrangements (clauses 16.1–16.3) typically implemented by debit‑credit or target systems under over‑award agreements; and (b) commission‑only arrangements governed by detailed entry/continuation rules (clause 16.7), including the MITA, annual reviews and minimum commission‑only rates (see [7]–[11]).
Over‑award systems for debit/credit and targets were traditionally left to the parties to negotiate and document; the Award provided a framework but not granular regulation of timing/quantum (see [59]).

After

The Commission added Schedule I temporarily to allow specified COVID‑19 months to be disregarded for MITA annual reviews, thereby altering the practical test for whether commission‑only arrangements must cease during that period (see [13], [57]).
The decision reaffirmed the Commission's reluctance to regulate over‑award mechanisms (like debit‑credit clawbacks) absent compelling evidence, and to substantially transform the nature of commission‑only employment through award variation (see [59], [62], [66]).
A short prospective moratorium on entering new commission‑only arrangements was imposed (6 August–30 October 2020) to maintain coherence with the temporary MITA change (see [67]).

Key passages with plain-English translation

"[T]he extraordinary market effects of the COVID-19 pandemic were not anticipated when the MITA was established..." ([57]).
- Translation: The MITA test was designed for normal market conditions. COVID‑19 produced an abnormal period that would unfairly drag down someone’s 12‑month commission average, so a temporary adjustment is needed.
"The Award does not regulate quantum or timing of commission... and leaves the matter to be agreed between the employer and the employee." ([59]).
- Translation: The Award sets minimum wages and some written‑agreement rules, but it does not run the day‑to‑day details of commission payment systems. Those are negotiated between employer and employee.
"The effect of granting the JobKeeper claim... will be to remove the benefit of the JobKeeper subsidy from the employer and thereby undermine its rationale." ([63]).
- Translation: If the Commission stopped employers using JobKeeper‑funded wages as part of the debit calculation, it would defeat the purpose of JobKeeper, which is to help employers keep paying staff during the downturn.
"Those variations would also transform commission-only employment into an entirely different form of employment." ([66]).
- Translation: Forcing a wage floor or similar guarantees on commission‑only jobs would change what commission‑only employment actually is; you cannot do that without strong justification.
"If the unusual circumstances... make it inappropriate to exclude persons from commission-only arrangements... it is equally inappropriate for persons to enter such arrangement in this period." ([67]).
- Translation: You cannot soften the exit test for existing commission‑only workers while letting new hires be taken on under the same arrangements; fairness and coherence require a short freeze.

What fact patterns trigger this precedent

This decision will be directly relevant where:

A temporary external shock (pandemic, natural disaster, major regulatory intervention) produces a concentrated set of months that would distort retrospective income tests used in an award (e.g. MITA‑style look‑back mechanisms), and a party seeks a limited temporal carve‑out to avoid unfair removals from a class of employment.
An applicant seeks to convert over‑award arrangements (debit‑credit systems, commission structures) into something regulated by the Award without compelling probative evidence.
An employee body seeks to restrict employer use of an external statutory subsidy (like JobKeeper) through award variation, where such a restriction would undermine the policy or operation of that subsidy and intrude into contractual over‑award space.
A party requests a prospective moratorium on a specific form of contractual employment to align with a temporary change to review/assessment mechanics under an award.

Key factors that the Commission will look for: cogent, probative evidence of market impacts; a narrowly tailored remedy; absence of intrusion into over‑award private bargains; consideration of s 134 factors (participation, flexibility, regulatory burden, stability).

How later courts have treated it

This decision applies the Commission's established approach: variations that are not self‑evident require probative evidence and the Commission must demonstrably show necessity under the modern awards objective (see the decision’s reliance on prior authorities and s 134 jurisprudence at [54]–[56], and citations such as National Retail Association v Fair Work Commission and the 4‑yearly review authorities referenced at fn [4]–[12]). Later courts and Commission determinations considering pandemic‑era temporary award adjustments have repeatedly required both narrow tailoring and evidentiary support; this decision sits as an example where a modest, temporally limited employer‑proposed fix was accepted while more intrusive employee‑proposed variations were rejected.

Practitioners should therefore expect that:

The Commission will favour narrowly tailored, temporally limited fixes to address exceptional circumstances.
Attempts to use award variation to alter the operation of Commonwealth subsidy schemes or to transform over‑award contractual regimes will face a high evidentiary threshold.
Prospective moratoria or temporary procedural adjustments may be acceptable as coherence measures where they align with other awarded relief.

(For specific later treatments of this decision, users should check subsequent FWC decisions and any appeals; this deep dive confines itself to the reasoning within [2020] FWCFB 3946 and established Commission jurisprudence cited at [54]–[56].)

Still-open questions

The limits of award intervention into over‑award contractual systems
- The decision draws a line: the Commission will not lightly intrude into debit‑credit and target systems. But exactly how much intervention is permissible where over‑award agreements produce systematic unfairness (unrelated to JobKeeper) remains a live question. What quantum and type of evidence would trigger regulation of over‑award debit‑credit schemes?
Interaction with future subsidy schemes
- This case held that prohibiting debits of JobKeeper would undermine the scheme. If future subsidy designs differ in structure, or if systemic misuse of subsidies by employers could be proven with cogent evidence, the Commission's response might differ. The boundary between preserving public policy objectives and protecting employees from exploitative arrangements remains fact‑dependent.
Duration and scope of temporal carve‑outs
- The decision accepted a six‑month disregard period for MITA months and a short moratorium; if economic recovery is protracted, what is the appropriate duration and criteria for extensions? The decision suggests temporary measures are acceptable, but not how long is too long.
Evidence thresholds in emergency contexts
- The bench required probative evidence for non‑self‑evident changes even during an emergency. Future applicants may test whether different types of empirical evidence (industry‑level data, sampled employer affidavits, commission‑level statistics) meet the necessary standard for more substantive changes.
Redistributional fairness between employees across employers
- The Commission was concerned about unequal effects where some employers receive JobKeeper and others do not. Determining when award intervention is justified to correct cross‑employer inequities created by a government scheme is an unresolved normative issue likely to reappear.

Practical takeaway: narrowly framed, evidence‑based, and temporally limited award variations to address exceptional market distortions are more likely to succeed than broad attempts to recast the substantive terms of existing award‑defined employment categories.

Judgment (96 paragraphs)

[1]

Applications to vary the Real Estate Industry Award 2020 [2020] FWCFB 3946 (4 August 2020)

[2]

[2020] FWCFB 3946

[3]

Fair Work Act 2009

[4]

s.157 - FWC may vary etc. modern awards if necessary to achieve modern awards objective

[5]

Applications to vary the Real Estate Industry Award 2020

[6]

Applications to vary Real Estate Industry Award 2020 in response to COVID-19 pandemic.

[7]

[1] This decision concerns two applications made pursuant to s 158(1) of the Fair Work Act 2009 (Cth) (FW Act) seeking to vary the Real Estate Industry Award 2020 (Award) in response to the COVID-19 pandemic. The first application is made jointly by the Real Estate Employers' Federation (REEF) and the Real Estate Employers' Federation of South Australia and Northern Territory (REEFSANT) (REEF application).[1]

[2] The REEF application (as amended) seeks to add a Schedule to the Award to allow for the months from May to October 2020 to be excluded from the calculation of the Minimum Income Threshold Amount (MITA) for the purpose of the annual review of employees on commission-only arrangements required by clause 16.7(h) of the Award. Clause 16.7(h) requires commission-only arrangements to cease where the employee, on review, has failed to earn the MITA over a preceding 12-month period. The purpose of the variation is to prevent employees being excluded from commission-only arrangements where there have fallen below the MITA because of the extraordinary effects of the COVID-19 pandemic. The REEF application is supported by the Real Estate Employers Federation of Western Australia (REEFWA). It has been agreed that the REEF application may be dealt with on the basis of written submissions, and persons who provided statements of evidence were not required for cross-examination.

[3] The second application to vary the Award is made by Mr Nathan Fox, a Licenced Commercial and Residential Manager/Salesperson, who is the Vice President of the Registered Real Estate Salespersons' Association of South Australia (RRESSA), an organisation of employees registered under the Fair Work Act 1994 (SA). While noting that the application is made by an individual, we will refer to it as the RRESSA application. In summary, the RRESSA application seeks the insertion of a Schedule to the Award with the following effect:

[8]

[7] Clause 14.1 of the Award prescribes minimum rates of pay. The Award also makes provision for two alternative options for the payment of remuneration. The first is that an employee and employer may agree for the employee to be paid commission, bonus or incentive payments in addition to the prescribed minimum wage. In this respect, clauses 16.1-16.3 provide:

[9]

16.1 Payment by wages with commission, bonus or incentive payments

[10]

(a) Where the employer and the employee agree that, in addition to the minimum weekly wage, the employee will be entitled to a portion of the commission paid to the employer, then any method of calculation or any formula for calculating the amount of commission that will be payable to the employee must be evidenced in a written agreement between the employer and the employee.

[11]

(b) Where it has been agreed between the employer and the employee that the employee will be entitled to a bonus or an incentive payment (as opposed to commission under clause 16.1(a)) particulars of the bonus or incentive payment entitlement must be evidenced in a written agreement between the employer and the employee.

[12]

(a) Once a written agreement has been made as provided for in clause 16.1 or clause 16.7, any subsequent agreement to vary the employee's commission, bonus or incentive payment arrangements must be evidenced in a further written agreement between the employer and the employee.

[13]

(b) 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 (whether made under clause 16.2 or clause 16.1) which was in force on the date the contract for sale or lease of property became legally enforceable. Provided that 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.

[14]

(c) A signed copy of every written agreement regarding commission, bonus or incentive payment arrangements must be provided by the employer to the employee.

[15]

The employer must account to the employee in written form for any commission, bonus or incentive payment-based entitlement as it becomes due and payable in accordance with the terms of any written agreement.

[16]

[8] The second alternative mode is for an employee who is engaged in property selling or leasing to be paid on a commission-only basis, in lieu of the minimum wages prescribed by clause 14.1. Clause 16.7(a) provides that commission-only employment arrangements may only be entered into by agreement, and that a commission-only employee must not be engaged on a part-time or casual basis. Clause 16.7(b) provides that the objective of commission-only employment is that a salesperson "should achieve remuneration of 125% or more of the annualised minimum wage that an employee working at the same property sales level under this award would be entitled to be paid." Clause 16.7(c) provides for the minimum entry requirements to commission-only employment as follows:

[17]

(c) Minimum requirements for commission-only employment

[18]

(i) A person may only enter into an agreement to be a commission-only employee when all of the following conditions have been satisfied:

[19]

the employee and the employer have made a written agreement as provided in clause 16.2 that the employee will be remunerated on a commission-only basis setting out the basis upon which the entitlement to commission will be calculated as provide in clause 16.2;

[20]

the employee has 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;

[21]

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;

[22]

the employee is not engaged as a part-time employee, a casual, a junior, a Real Estate Employee Level 1 or a trainee; and

[23]

for an employee employed on a commission-only basis after 2 April 2018 the employee can establish (with the present or any past employer) that he or she has achieved the Minimum Income Threshold Amount (MITA) prescribed by clause 16.7(d) as may be amended from time to time). Provided that, 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.

[24]

(ii) For the purpose of clause 16.7(c)(i), "real estate business" shall mean a business involved in the sale of real property or businesses.

[25]

(iii) An employee who qualified to be employed on a commission-only basis under this award prior to 2 April 2018 will continue to be eligible for commission-only employment under the terms of this award as long as the employment with that employer continues, and subject to continuing to meet the MITA as required in clause 16.7(d).

[26]

[9] The MITA is prescribed by clause 16.7(d)(i) as follows:

[27]

(i) For the purpose of entering into commission-only employment, the MITA has 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 employee's classification rate as specified in clause 14 - Minimum rates, calculated as an annual amount, excluding statutory superannuation.

[28]

[10] Clause 16.7(e) provides that the provision of the awards relating to part-time and casual employment, minimum rates, payment by commission, bonus or incentives in addition to wages, allowances, overtime and annual leave loading do not apply to commission-only employees. Clause 16.7(f)(i) provides that the minimum commission-only rate is 31.5% of the employer's gross commission, and clause 16.7(ii) provides that 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" subject to clause 16.6(iii) and (iv), which establishes rules for the payment of commission where more than one employee is responsible for a sale or commercial leasing transaction.

[11] Clause 16.7(h) provides for when commission-only arrangements must cease:

[29]

(h) When commission-only arrangements must cease

[30]

(i) The gross income of commission-only employees must be reviewed annually to establish gross income.

[31]

(ii) For employees on commission-only arrangements entered into prior to 2 April 2018 the review must occur no later than 12 months from 2 April 2018.

[32]

(iii) For employees engaged on commission-only arrangements entered into after 2 April 2018 the review must occur no later than 12 months from the date those arrangements were entered into.

[33]

(iv) Where the review establishes that the gross income of a commission-only employee for the year under review is less than the MITA as provided in clause 16.7(d) the commission-only arrangement must cease.

[34]

[12] Clause 16.7(i) prescribed the circumstances in which commission-only arrangements can be resumed after they have ceased pursuant to clause 16.7(h). Clause 16.6 is concerned with the calculation of NES leave entitlements for commission-only employees.

[35]

[13] The REEF application initially sought to postpone the annual review in clause 16(h) of the Award until October 2021. REEF subsequently amended the application to seek the addition of a new Schedule I - Award Flexibility During the COVID-19 Pandemic, to operate in lieu of clause 16.7(h) of the Award, as follows:

[36]

Schedule I - Award Flexibility During the COVID-19 Pandemic

[37]

I.1 Schedule I operates from [ ] 2020. During the operation of Schedule I, 16.7(h) is of no effect and the following provisions apply:

[38]

(i) The gross income of commission-only employees must be reviewed annually to establish gross income.

[39]

(ii) For employees on commission-only arrangements entered into prior to 2 April 2018 the review must occur no later than 12 months from 2 April 2018.

[40]

(iii) For employees engaged on commission-only arrangements entered into after 2 April 2018 the review must occur no later than 12 months from the date those arrangements were entered into.

[41]

(iv) Pursuant to this clause, where an annual review is undertaken after 1 May 2020, the months of May, June, July, August, September and October 2020 (the COVID-19 months) may be disregarded in the calculation of the MITA for the preceding 12-month period under review if the work in that month has been impacted by COVID-19. The MITA will be adjusted accordingly in proportion to the number of months disregarded, provided that, where the commission-only employee's review date falls part way through any COVID-19 month, that month may only be disregarded where the review is due after the 14th of the month.

[42]

(v) Where the review establishes that the gross income of a commission-only employee for the year under review is less than the MITA as provided in clause 16.7(d) the commission-only arrangement must cease.

[43]

[14] In support of the REEF application, REEF and REEFSANT submit that the claim arises as a direct result of the COVID-19 pandemic and government initiatives to contain the pandemic. Commission-only employment has been impacted by the pandemic and the initiatives. Commission-only employees have been prevented, or materially restricted, from operating normally in the pursuit of sales. As a result, such employees may have periods where they have failed, or may fail in future, to achieve any sales or may achieve a substantially reduced number of sales, compared to the norm. This has arisen through no fault of the employee or the employer and may produce a materially negative effect to the outcome of a commission-only employee's annual MITA review. The claim is targeted at preventing this inequity from occurring by allowing months where, because of the pandemic a commission-only employee has not made any sales, or a substantially reduced number of sales compared to the norm, to be disregarded for the purposes of the MITA. This will allow a fair and accurate assessment of performance over a period not "artificially polluted by the Pandemic".

[15] It is also submitted that the real estate industry is materially affected by Government initiatives to contain the spread of the pandemic, and these impacts are direct and indirect. Direct effects include social distancing measures which have prevented real estate agents from operating in a pre-pandemic manner. Although restrictions have been eased, restrictions on pre-pandemic conduct of real estate agents remain. Impact of the pandemic on the general economy has also had ripple-on effects on the real estate industry. The indirect impact and general economic conditions will have an ongoing impact, the extent of which can only be speculative given the uniqueness of the situation.

[16] Real estate auctions and open houses were banned from late March and restrictions only started to lift in late April-May. Not all restrictions have been lifted. The levels of listings are low and auction numbers are also lower with fewer auctions being held than the corresponding week a year ago. Evidence from witnesses who provided statements in support of the Application is that:

commission-only employment is a common feature with the real estate industry;

[44]

[19] RRESSA does not argue with the information in the submissions in support of the REEF application as to the effect of COVID-19 on the real estate industry and the Australian economy. According to RRESSA, what is in dispute is whether the REEF application is warranted given the significance as to its impact on borderline commission-only salespersons and their ability to earn a living wage for the period May 2020 - May 2022.

[20] RRESSA contends that for salespersons engaged on a commission-only basis who are high performers, the MITA will not be a problem and while such employees may earn less than they have in the past, if they fit the description in REEF evidence as high performers, they will meet the current MITA. Those in danger of missing out are the borderline commission-only salespersons. It is submitted that under normal circumstances, this category of commission-only salespersons would be debit-credit salespersons with a guaranteed wage.

[21] RRESSA further contended that if REEF's members were truly worried about ensuring their commission-only salespersons MITA, they could increase the percentage share of the employer's commission on a temporary basis, or top-up the difference after the JobKeeper subsidy has been applied. RRESSA also submits that the effect of the REEF application is to seek to reduce wages and notwithstanding COVID-19, no other award had been varied in such a manner. Redundancies may be inevitable unless the employers adopt different strategies by sharing the pain by increasing the percentage share for commission-only salespersons or topping up their earnings. RRESSA opposes the REEF application on the basis that it undermines the requirements of s 134 of the FW Act.

[45]

[22] The RRESSA application seeks the insertion of a new schedule 1A into the Award in the following terms:

[46]

Notwithstanding any other provision of this Award, the following provision shall apply from the date of the order of the Fair Work Commission coming into force and shall expire on the 1st October 2021.

[47]

(a) No employee employed pursuant to this Award shall have any payments by their employer pursuant to the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 - No. 38 2020 (JobKeeper payment) debited against the employee's agreed share of the employer's commission, bonus or incentive payment with respect to the sale or lease of real property.

[48]

(b) An employee employed pursuant to clause 16.7 of the Award (Commission-only) shall not be paid less than the minimum wage (annualised) as prescribed by clause 14 of the Award for the period from the 30th September 2020 and the 1st October 2021, or at an earlier date (on a pro rata basis) should the employee's employment cease prior to the 1st October 2021.

[49]

(c) No employee who is not at the date of this Schedule coming into force already employed as a commission-only salesperson, shall be eligible to be employed on a commission-only basis until the 1st October 2021.

[50]

[23] RRESSA submits that the JobKeeper claim concerns employees who have made written agreements as provided in clause 16.1 of the Award for payment of wages with commission, bonus or incentive payments. It is necessary to note that there is a practice in the real estate industry whereby such agreements operate on the basis of a "debit-credit" system. The debit-credit system operates so that in an agreed period, an employee (usually a real estate salesperson) is "credited" with an agreed percentage of the net commission he or she generates from property sales. From this credit calculation, the costs associated with employing the salesperson are debited. Once the debiting of employment-based payments and other agreed amounts has been undertaken, the employee's commission account will either be in debit (i.e. the employee has not generated sufficient sales commission to be entitled to any additional remuneration) or it will be in credit (i.e. the employee has generated sufficient sales commission to become entitled to additional remuneration). Where there is a "credit" resulting from the calculation, this amount then becomes an amount payable to the employee. Conversely, if the salesperson has been paid more by way of employment-based entitlements than is credited to them from settled sales, the negative balance carries over to the next period and the calculations start again for that period, using the negative balance as the starting point for the notional balance in the commission account.

[24] There are also systems for commission, bonus or incentive payments that operate as a target system. Under a target system the employer sets a target of net commission that the employee must generate before there is an entitlement to receive sales commission. The employee is credited with a total amount of net commission from the components of each property transaction for which they were responsible. Commission is only payable to the employee after the agreed target has been exceeded.

[25] The JobKeeper claim is intended to address what RRESSA submits is "double dipping" by employers in a manner that exploits the JobKeeper subsidy. RRESSA submits that real estate employers in receipt of the JobKeeper subsidy are paying the subsidy to wages employees operating under the debit-credit system, totalling $1500 per fortnight, and an additional payment to equal the Award rate plus allowances, and are then debiting the entire amount against the employee's future commission earnings.

[51]

"Is there any way for me to claw back, or withhold the JobKeeper payment through the payment of commission to commission-only employees?

[52]

No. There is no mechanism in the REEF template commission-only agreements or the Real Estate Industry Award for JobKeeper payments to be subject to 'claw back' or recovery through the commissions paid to commission-only employees.

[53]

Can an employer continue to debit a debit/credit salesperson the full amount of their wages (which includes the JobKeeper payment) and allowances when calculating commission payments?

[54]

Yes. Provided the employee's written commission structure contains appropriate 'debiting' arrangements. REEF's template debit-credit commission structures contain such a provision. Remember you can only debit what has actually been paid to the salesperson."

[55]

[30] RRESSA also tendered copies of messages posted on an on-line chat forum containing questions and answers from various persons about JobKeeper payments for employees on debit-credit arrangements. These were said to establish that there is a significant amount of confusion about such matters.

[31] The commission-only claim seeks to establish an entitlement for commission only salespersons to receive at least the minimum annualised wages for debit credit salespersons for the period from 30 September 2020 to 1 October 2021. In relation to this claim, it is submitted that the COVID-19 pandemic has caused economic hardship in many industries and while restrictions have been relaxed in the real estate industry, it is too early to estimate how the real estate market will fare over the 12 months following the removal of the JobKeeper subsidy.

[32] RRESSA contends that if employers decide to effect redundancies, they will select debit credit employees, given their higher wages cost in comparison with commission-only employees. In this regard, the commission-only claim is intended to protect debit credit employees from discrimination, on the basis of whether or not they are entitled to a minimum wage, when decisions about redundancy are made by employers. RRESSA also contends that this claim will provide a safety net for commission-only employees from poverty and prevent them from working for less than the federal minimum wage.

[33] In its prohibition claim, RRESSA seeks that there be no further employment of commission-only employees for a twelve month period. It submits that commission-only employment was designed around the more successful sales employees who could earn at least 125% of the Award rate excluding superannuation. The economic fall-out of the COVID-19 pandemic in the real estate industry and generally makes it prudent not to increase the number of commission-only employees until there is an improvement in economic circumstances. RRESSA also contends that there is a real prospect that current debit credit employees will be forced onto commission-only arrangements, as an alternative to redundancy, on the basis of their earnings prior to the pandemic. This may result in such employees earning less than the federal minimum wage.

[56]

Submissions in opposition to the RRESSA application

[57]

[36] REEF and REEFSANT oppose the RRRESSA application and submit that the application is made by an individual employee who has a materially different legitimate interest to that of a representative organisation. It is also submitted that the Mr Fox's actual experience is limited to South Australia and his personal experience potentially as a current salesperson although this is not entirely clear, and his role as Vice President of a South Australian organisation. This should colour how the Commission approaches the exercise of discretion in this matter.

[37] REEF and REEFSANT submit that because the variations are not self-evident, to succeed the Applicant must adduce probative evidence to support that the variations to the Award are necessary to achieve the modern awards objective (ss 157 and 134). It is submitted that there is no probative (and in most cases no evidence at all):

about the impact of the COVID-19 pandemic on any employer or employee in the Real Estate Industry, not even Mr. Fox himself;

concerning the use of JobKeeper in the Real Estate Industry;

concerning the operation of JobKeeper in regard to a commission-only employee or an employee earning wages and an incentive, not even Mr. Fox.

[38] It was submitted that there is also no direct evidence from an employer or employee that could be said to support the application or allow the Commission to make the necessary findings to grant the application. Mr Fox's statement is said to be more submission than evidence and contains no evidence concerning Mr Fox as an employee. There is also nothing in the statement that could lead to a conclusion that he is qualified to give opinion based evidence on the Real Estate Industry generally and certainly not outside of South Australia. Chat material tendered by Mr Fox was also submitted to be random on-line comments of unidentified contributors without any understanding of their circumstances or the truth of their comments and with no way of testing the statements and should not be admitted.

[39] In relation to the claim with respect to commission-only employment, REEF and REEFSANT submit that such employment has been the subject of exhaustive consideration in the 2012 Transitional Review and 4 Yearly Review of modern awards. It is submitted that a number of things can be concluded from this exhaustive examination of commission-only employment, including:

[58]

[53] By virtue of s 157 of the FW Act, the Commission may make a determination varying a modern award if the Commission is satisfied the determination is necessary to achieve the modern awards objective. The modern awards objective is to "ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions", taking into account the particular considerations identified in s 134(1)(a)-(h) (the s 134 considerations).

[54] The modern awards objective is very broadly expressed.[4] It is a composite expression which requires that modern awards, together with the National Employment Standards (NES), provide a fair and relevant minimum safety net of terms and conditions, taking into account the matters in s 134(1)(a)-(h).[5] Fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question.[6] The obligation to take into account the s 134 considerations means that each of these matters, insofar as they are relevant, must be treated as a matter of significance in the decision-making process.[7] No particular primacy is attached to any of the s 134 considerations[8] and not all of the matters identified will necessarily be relevant in the context of a particular proposal to vary a modern award.

[55] It is not necessary to make a finding that the award fails to satisfy one or more of the s 134 considerations as a prerequisite to the variation of a modern award.[9] Generally speaking, the s 134 considerations do not set a particular standard against which a modern award can be evaluated; many of them may be characterised as broad social objectives.[10] In giving effect to the modern awards objective the Commission is performing an evaluative function taking into account the matters in s 134(1)(a)-(h) and assessing the qualities of the safety net by reference to the statutory criteria of fairness and relevance.

[56] What is "necessary" to achieve the modern awards objective in a particular case is a value judgment, taking into account the s 134 considerations to the extent that they are relevant having regard to the context, including the circumstances pertaining to the particular modern award, the terms of any proposed variation and the submissions and evidence. It is also the case that where variations are not self-evident, an applicant seeking a change, must adduce probative evidence to support the contention that the variations are necessary to achieve the modern awards objective.

[59]

[57] We have determined to grant the REEF application as amended. In our view it is an appropriate response to the impacts of the COVID-19 pandemic on commission-only employees and their ability to earn commission, and is necessary to meet the modern awards objective. The extraordinary market effects of the COVID-19 pandemic were not anticipated when the MITA was established. To include the peak period of the pandemic in the calculation of the MITA for the purpose of the annual review required under clause 16.7(h) might result in commission-only employees being removed from those arrangements in circumstances where, in normal circumstances, they would earn commission in excess of the MITA. Removal from commission-only arrangements in the current economic climate is likely to place the employee's employment at risk if the employer cannot afford to retain the employee on a wages basis.

[60]

[58] In relation to RRESSA's JobKeeper claim and the commission-only claim, we make the following observations. The provisions of the Award in relation to wages employees with commission, bonus or incentive agreements, are not prescriptive as to the substantive terms of those arrangements but rather are procedural. Those procedural terms are: that such agreements are required to be in writing (clause 16.1 (a) and (b)); that variations are in writing (clause 16.2 (a) and (b); a signed copy of an agreement is given to the employee party (clause 16.2(c)); the employer accounts to the employee in written form as the amounts calculated in the agreed manner become payable (clause 16.3); providing the conditions under which an employee is entitled to be paid amounts on or after termination of employment (clause 16.4); and providing for a dispute settlement procedure in relation to disputes about whether all or any part of the commission is due to an employee pursuant to clause 16.1 (clause 16.5).

[59] The Award stipulates only the minimum weekly wage rates and allowances, and other NES entitlements for employees who make agreements pursuant to clause 16.1 and does not stipulate the manner of calculating commission, bonus or incentives for such employees. Further, the debit-credit arrangements or the target arrangements are not provided for in the Award. In short, the arrangements operate in the over-award space and are a mechanism commonly used by the parties in the real estate industry for purposes including incentivising employees while guaranteeing them minimum wages and other Award conditions and allowing the employer to offset those amounts. For example, such an arrangement may allow the employer to pay such amount of commission, bonus or incentive, as and when it determines, in its absolute discretion, subject only to the terms of the direction. The Award does not regulate quantum or timing of commission, bonus or incentive payments and leaves the matter to be agreed between the employer and the employee.

[60] In relation to commission-only employees, the Award provides for some additional matters which regulate entry into, and continuation of, commission-only employment and arrangements for such employment, as follows:

the minimum classification level that an employee must be entitled to be classified at, in order to enter into a commission-only agreement - clause 16.7(a)(i);

[61]

s 134(1)(a): relative living standards and the needs of the low paid

[62]

[69] In relation to the criteria in s 134(1)(a), the parties did not make submissions or place evidence before us in relation to any impacts on relative living standards and the needs of the low paid with respect to either of the applications.

[70] It is well established that a threshold of two-thirds of median full-time wages provides "a suitable and operational benchmark for identifying who is low paid"[13] within the meaning of s 134(1)(a). The most recent data for median earnings is for August 2019 from the ABS Characteristics of Employment (CoE) survey. Data on median earnings are also available from the Survey of Employee Earnings and Hours (EEH) for May 2018. On the basis of the data from the CoE survey for August 2019, two-thirds of meerdian weekly earnings for full-time employees is $916.67. Data available from the EEH survey for May 2018 on median weekly full-time earnings found that two-thirds of median earnings is equal to $973.33.

[71] Using the two-thirds of median full-time wages as the benchmark, there are employees paid the wages prescribed by the Award in the Award who are "low paid" within the meaning of s 134(1)(a). The effect of the variations sought by RRESSA in relation to the JobKeeper claim and the commission-only claim would likely result in increased earnings for employees while they are in receipt of the JobKeeper payment, and in a higher debit balance for wages employees on commission, incentive or bonus arrangements which they will be required to make up before they can earn additional amounts above the Award minimum. This weighs in favour of granting the application in respect of these claims, albeit slightly, given the likely negative impacts of granting the application set out below.

[72] In relation to the REEF application, we are of the view that it does not alter substantive wages and conditions in the Award and as such the relative living standards and needs of the low paid are a neutral consideration in that matter.

[63]

s 134(1)(b): the need to promote collective bargaining

[64]

[73] Collective bargaining is not a feature of the real estate industry and whether we grant or refuse either, or both, of the applications, there will be no impact in relation to this matter. Accordingly, it is a neutral consideration.

[65]

s 134(1)(c): the need to promote social inclusion through increased workforce participation

[66]

[74] This consideration is directed at obtaining and maintaining employment. In our view, the impact of granting the RRESSA application would have a negative impact on employment. With respect to the JobKeeper application, the incentive for employers to maintain employees in employment will be reduced if employers are not permitted to receive the full benefit of the subsidy. In relation to the commission-only claim, there will be a similar disincentive to maintain commission-only employees in employment, in circumstances where the entire basis of their employment has effectively been transformed into wages and commission. It is also the case that the prohibition claim will not promote increased workforce participation by virtue of excluding a type of employment which is well-established in the real estate industry.

[75] In contrast, we are of the view that the REEF application will promote increased workforce participation, by providing a mechanism to retain commission-only salespersons in employment during a period where the COVID-19 pandemic prevents or hinders them in carrying out their role and earning commission. We also note that commission-only salespersons who are employed by employers eligible for the JobKeeper subsidy are in receipt of JobKeeper payments, which is subsidising their income.

[67]

s 134(1)(d): the need to promote flexible modern work practices and the efficient and productive performance of work

[68]

[76] We accept that wages and commission, incentive or bonus and commission-only employment are mechanisms which promote flexibility and efficiency. These mechanisms achieve this by encouraging and incentivising employees to sell property and thereby increase their earnings and the income of the employer. Notwithstanding RRESSA's trenchant criticism of commission-only employment, it is a well-established system of employment in the real estate industry. While it is unique, so is the real estate industry. It is also the case that the provisions of the Award in relation to commission only employment have been extensively reviewed including increases to the minimum Award rates in recognition of skills exercised by employees. This has benefited commission-only employees by increasing the minimum level of earnings on which the MITA is based. Further, there have been additional protections for commission-only employees included in the Award.

[77] Accordingly, the current Award provisions may be presumed to meet the modern awards objective, and any variation that significantly alters those provisions would require cogent supporting evidence. The evidence placed before the Commission by RRESSA does not persuade us to vary those provisions in the substantive manner claimed. Much of that evidence is opinion based on past experience and not on the operation of the current Award provisions.

[78] The RRESSA claim in its entirety will not promote flexible modern work practices and the efficient and productive performance of work and this is a matter that weighs against granting the claim.

[79] We are of the view that to the extent that it will maintain existing commission-only employees in employment, to a greater degree than would otherwise be the case, the REEF application proposes variation to the Award which will promote flexible modern work practices and the efficient and productive performance of work.

[69]

s 134(1)(da): the need to provide additional remuneration for employees working certain hours

[70]

[80] This consideration is not relevant in the present case.

[71]

s 134(1)(e): the principle of equal remuneration for work of equal or comparable value

[72]

[81] This consideration is also not relevant in the present case.

[73]

s 134(1)(f): the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden

[74]

[82] The mechanisms by which employers in the real estate industry implement agreements for wages with commission, incentive or bonus and commission-only employment, are well established. Employer organisations produce template documents and those documents are used to enter into agreements under the Award. The JobKeeper claim and the commission-only claim will impact on those agreements in a manner that will increase both employment costs and the regulatory burden. Both claims fundamentally alter the existing employment arrangements provided for under the Award. The effect of the commission-only claim is to create an entirely new category of employment.

[83] In contrast, the variation proposed in the REEF application is consistent with the existing provisions of the Award and does not alter them in a substantive way. As such the impact on the regulatory burden and employment costs for employers of such a variation will be negligible.

[75]

s 134(1)(g): the need to ensure a simple, easy to understand, stable and sustainable award system

[76]

[84] For similar reasons as those relating to s 131(1)(f) our view is that to grant the RRESSA application would be contrary to the consideration of ensuring a simple, easy to understand, stable and sustainable award system. The provisions of the Award in relation to commission-only employment are relatively simple, easy to understand, stable and sustainable, given the extensive review to which they have been subjected in recent times. To vary the Award in the manner proposed with respect to the JobKeeper claim and the commission-only claim would be contrary to this consideration.

[85] Conversely, the REEF application does not propose a substantive alteration to the provisions of the Award which it seeks to vary.

[77]

s 134(1)(h): the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

[78]

[86] The applications before us relate to a single award. There is no evidence as to the likely impact of any claims on the matters for consideration in s 134(1)(h) and this is a neutral consideration in the present case.

[79]

[87] A draft determination to give effect to the variations we will make is appended to this Decision. Any submissions in response to the draft determinations must be filed by 2.00pm on Wednesday 5 August 2020. The variations will take effect from Thursday 6 August 2020.

[80]

Seal of the Fair Work Commission with Member's signature.

[81]

Mr N Ward and Mr D Collits on behalf of REEF and REEFSANT.

[82]

Mr J Lilleyman and Mr P Moss on behalf of REEFWA.

[83]

Mr R Clarke on behalf of RRESSA and Mr Nathan Fox.

[84]

Mr T French on behalf of the Australian Property Services Association.

[85]

[3] CCIWA COVID-19 Business Impact Survey.

[86]

[4] Shop, Distributive and Allied Employees Association v National Retail Association (No 2) [2012] FCA 480, 205 FCR 227, 219 IR 382 at [35]

[87]

[5] [2017] FWCFB 1001, 265 IR 1 at [128]; Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161, 253 FCR 368, 272 IR 88 at [41]-[44].

[88]

[6] [2018] FWCFB 3500 at [21]- [24].

[89]

[7] Edwards v Giudice [1999] FCA 1836, 94 FCR 561 at [5]; Australian Competition and Consumer Commission v Leelee Pty Ltd [1999] FCA 1121 at [81]- [84]; National Retail Association v Fair Work Commission [2014] FCAFC 118, 225 FCR 154, 244 IR 461 at [56].

[90]

[8] Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161, 253 FCR 368, 272 IR 88 at [33].

[91]

[9] National Retail Association v Fair Work Commission [2014] FCAFC 118, 225 FCR 154, 244 IR 461 at [105]- [106].

[92]

[10] See ibid at [109]-[110]; albeit the Court was considering a different statutory context.

[93]

[11] See generally: Shop, Distributive and Allied Employees Association v National Retail Association (No.2) [2012] FCA 480, 205 FCR 227, 219 IR 382.

[94]

[12] Re 4 Yearly Review of Modern Awards - Preliminary Jurisdictional Issues ; [2014] FWCFB 1788, 241 IR 189 at [23].

[95]

[13] [2017] FWCFB 1001, 265 IR 1 at [32].

[96]

Printed by authority of the Commonwealth Government Printer

Applications to vary the Real Estate Industry Award 2020 [2020] FWCFB 3946 (4 August 2020)

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Applications to vary the Real Estate Industry Award 2020 [2020] FWCFB 3946 (4 August 2020)

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