2 salesman + commission-only salaries = 1 hefty fine
Commission only salaries…think they are legal…well think again.
It’s been a tough learning for an Adelaide based residential property company fined $29,790 in the Federal Circuit Court after it was found to be using misleading job advertisements to hire staff.
The case against the Longridge Group relates to two employees who accepted sales positions within the company on the understanding they would annually earn more than $120,000 and $70,000 respectively.
After working for a period of 10 months and earning less than $7,000, one employee resigned. The other employee quit after six months and had been paid nothing at all.
Following legal action by the Fair Work Ombudsman (FWO) and under the 2010 Miscellaneous Award, it was established the pair were legally underpaid a total of $24,956 in minimum wages and entitlements.
The Longridge Group also admitted it had inadvertently breached workplace laws by paying the two employees on a commission-only basis in 2011 – 2012.
The FWO only became involved when they received complaints from the employees and further legal action only taken when the company refused to back pay the outstanding monies.
Any employee is entitled to a base rate of pay that meets the minimum wages set under the relevant Modern Award. Where there isn’t an applicable Modern Award, the minimum wage for Australian employees is the baseline.
The reasons considered in relation to Longridge’s heavy fine:
- the employees were not remunerated for valuable services they provided to Longridge
- failure to keep proper employment records (Longridge accepted there was no reasonable excuse for not keeping proper employment records)
- breach of the relevant modern award (Miscellaneous Award 2010) by not paying minimum wage.
- Longridge was unaware the Miscellaneous Award was applicable to their employees
A further risk to any business relates to mis-representing the terms and conditions of employment. If it is represented to an employee in an advertisement they will be able to receive commission and this doesn’t eventuate, the employee may have a claim under the Australian Consumer Law for being misled about their terms and conditions of employment
So… a few points to consider:
- Every employee who works in Australia MUST receive at least the Australian minimum wage plus entitlements such as sick leave, annual leave etc.
- Determine if a modern award applies to your workforce to ensure each employee is paid on or above the minimum wage; thus avoiding the risk of breaching the award. If a modern award is not applicable, the Australian minimum wage applies.
- Employment agreements should be clear that wages are based on either the modern award (including classification) or the Australian minimum wage and that any commission is an additional incentive payment based on achieving stated objectives.
- Only real estate agents and car salesman can be provided with commission-only employment… even then, if the minimum wage set by the modern award at the relevant classification is not met through commission payments, the employer has to make up the difference.
- Adequate records of employment must be retained by you, including signed employment contracts / agreements, employee payment and accrued entitlement details.
- Fines up to $10,200 for individuals and $51,000 for corporations can be applied for breach of the Fair Act in relation to these matters as well as being ordered to pay back pay.
Final Notes
Minimise the risk to your business… ensure the minimum wage is paid to every employee.
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Akyra can help your business to assist and support all your questions and concerns related to recruitment and pre-employment screening documents. Please contact Akyra on 07 3204 8830 or book a free 30-minute consultation for an obligation-free conversation.
Disclaimer – Reliance on Content
The material distributed is general information only. The information supplied is not intended to be legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.
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