2010 Industrial Briefing Greg Paterson – Executive Director 1

“Let me ‘entertain’ you!!”…topics to discuss 1. “Are we there yet?” – a workplace journey with Labor; 2. The rules of the dismissal game that every player needs to know; 3. Understanding the new minimum employment standards…the traps for ‘young’ players; 4. Just when you thought you had it figured out, you face the ‘transitional’ maze!; 5. Our checklist to help you get it right. 2

The journey of change under Labor Fair Work Act 2009 [FWA] delivers Labor’s 2007 election promise to ‘bin’ WorkChoices; Labor ‘renovates’ the property but keeps the foundations; Key changes have been: -Abolition of AWAs; -Reintroduction of unfair dismissal; -Greater union rights; -A set of national awards and extension to minimum national employment standards (NES). Labor removes the Federal/State complexity…well almost! Where do you fit?? 3

Building Labor’s workplace relations system cont’d Fair Work Act 2009 National Employment Standards Modern Awards 4

The termination dilemma– moving staff on 5

The termination dilemma cont’d The FW Act has re-introduced unfair dismissal provisions; Different rules apply depending upon the number of employees:  Less than 15 ‘full time equivalent’ employees; and  15 ‘full time equivalent’ employees or more 6

How many Employees? Under 15 employees Tenure greater than 12 months? Yes Fair dismissal Code applies No Employee cannot make Unfair Dismissal claim 15 employees or more Tenure greater than 6 months? Yes FWA can hear UD claim No Employee cannot make Unfair Dismissal claim 7

The termination dilemma cont’d Small Business Fair Dismissal Code Special arrangements for small businesses with less than 15 FTE employees The Code recognises that small business does not have : > Human resource management departments; > They cannot afford to lose time; and > They cannot readily redeploy employees into other positions or workplaces A simple six paragraph Fair Dismissal Code which, if complied with by the small business owner, should ensure a dismissal is not “unfair”…see REEF’s website for a copy of the Code. 8

The termination dilemma cont’d Unfair Dismissal for Large Businesses It’s back to the long established concepts of substantive and procedural fairness Substantive fairness (substantive reason for termination) Procedural fairness (a fair procedure is followed) Termination will be unfair if it is deemed ‘harsh, unjust or unreasonable’ 9

The termination dilemma cont’d Unfair dismissal in practice 10

….and that’s not the worst of it!!!!!! General protections New provisions of the FW Act > a person must not take “ adverse action” against another person for exercising a “workplace right” or for a “discriminatory” reason!! 11

…and that’s not the worst of it (cont’d) “adverse action” means dismissing, injuring, altering or discriminating against an em’ee, prospective em’ee or contractor. 12

…and that’s not the worst of it (cont’d) “workplace right” means the person is entitled to the benefit of a workplace law or workplace instrument. 13

…and that’s not the worst of it (cont’d) “discrimination” includes race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibility, pregnancy, religion, political opinion, national extraction or social origin. 14

…and that’s not the worst of it (cont’d) And be careful you don’t dismiss an em’ee because of “temporary absence from work because of illness or injury” 15

…and that’s not the worst of it (cont’d) Penalties for getting it wrong! 1. Unfair dismissal – re-instatement or compensation up to 6 mths total remuneration 2. General protections – re-instatement; no limit on compensation orders that can be made; penalties up to $33,000; interest; costs (limited circumstances) 16

National Employment Standards “The NES provide employers with the flexibility and simplicity they need while also ensuring employee’s key entitlements are protected.” “The NES will ensure that all employees are protected by a strong safety net of fair minimum conditions that can’t be stripped away.” “The NES will apply to all employees in the federal system regardless of industry, occupation or income.” - Julia Gillard 17

National Employment Standards Cont’d The NES Maximum Weekly Hours of Work Requests for flexible working arrangements Leave entitlements Parental leave Annual leave Personal leave Community Service leave Long service leave Public holidays Notice of Termination & Redundancy Fair work information statement 18

Award Modernisation “The creation of modern awards is not intended to: …(c) disadvantage employees; (d) increase costs for employers.” - Julia Gillard in her award modernisation request to the AIRC (May 2009) 19

Award Modernisation Cont’d “…the process is not intended to disadvantage employees or increase costs for employers – objectives which are potentially competing. …it is clear that some award conditions will increase, leading to cost increases and others will decrease, leading to potential disadvantage for employees” - The AIRC in its decision of 2 Sept

Award Modernisation Cont’d Long, difficult process resulted in: a modern industry award to cover operational employees called the…. REAL ESTATE INDUSTRY AWARD 2010; and A separate award to cover clerical employeescalled the… CLERKS - PRIVATE SECTOR AWARD now let’s examine select elements of both awards 21

Award Modernisation Cont’d REAL ESTATE INDUSTRY AWARD 2010 “This award covers employers in Australia engaged in the real estate industry in respect of their em’ees in classifications [prescribed by the award]” Classifications= sales, property m’gt and strata m’gt employees but NOT clerical em’ees! 22

Award Modernisation - REI Award 2010 Cont’d IMPORTANT CHANGES ItemPrevious AwardModern Award Restrictions on part-time employment -p/t (sales) based on days - no for LIC -Based on hours not days - can apply to LIC (note: PSBA Supervision requirements) Classifications-Salesperson, LIC, Probationary s’person, Prop M’ger, Prop Officer Sales /prop m’gt/ strata m’gt streams with 3 levels in each Commission-only employment -MITT = 100% of award rate -?? over all-up rate -MITT= 110% (no car allowance) -All-up rate allowed Certificate of Exemption- Exemption from certain award terms when em’ee paid 30% above award - N/A 23

Award Modernisation - REI Award 2010 Cont’d ItemPrevious AwardModern Award Allowances – car - home ph. -Standing charge paid on periods of leave - no all-up per km rate - no variation since $10 per wk -No payment on periods of leave - 74c per km an option - rate will vary annually CPI - no allowance Stand-by & Call-out-No provision - entitlement for Prop/strata M’gt to receive compensation when on stand-by or called out a/h Hours of Work-No hours but restrictions on 5 days (sales) or 5.5 days (prop m’gt) - 38 per wk over no more than 5.5 days 24

Award Modernisation - REI Award 2010 Cont’d ItemPrevious AwardModern Award Registration of Employment Agreements - Full Employment Agreement prepared and registered with REEF and REA -Only the commission structure has to be registered or statement that commission/bonus does not apply (REEF also suggests that “Reference Schedule” should also be registered). Will cease in

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Award Modernisation - REI Award 2010 Cont’d UNDERSTANDING THE NEW CLASSIFICATIONS Previous AwardModern Award LIC ($669.18)Property Sales Supervisor ($669.18) Salesperson ($578.36)Property Sales Representative ($578.36) N/AProperty Sales Associate ($ then $563.90) Probationary S’personN/A Property or Strata M’gt Supervisor (713.26) Property Manager ($617.88)Property or Strata M’gt Representative ($617.88) Property Officer –Grades 1-3 ($601.16;$583.30;$567.34) Property or Strata M’gt Associate ($583.30) 27

Award Modernisation - REI Award 2010 Cont’d UNDERSTANDING ORDINARY HOURS OF WORK 38 per week worked on any day; 1.5 or 2 rostered days free of duty each week; Hrs may be averaged over an 8 week period; O/T paid at:  Single time if hrs worked on rostered day; or  x1.5 or x2 where worked on a RDO; No extra payment where em’ee works without the specific direction of the em’er!! 28

Award Modernisation - REI Award 2010 Cont’d UNDERSTANDING COMMISSION-ONLY EMPLOYMENT 29

Understanding commission-only employment C/O em’ees are indeed that….employees!! Strict conditions apply to engaging C/O em’ees; MITT is key among them: 1. Select the em’ees best 12 month sales period over last 5 yrs; 2. Calculate the net comm for each sale during the period (= gross – GST, conj agents fees and 10%); 3. Total the transactions; 4. Multiply by 35%; 5. If answer to 4 above is > annual award wage, MITT is satisfied. (110% if no allowances to be paid). 30

Understanding commission-only employment There must be a written agreement on the method of remuneration; Minimum C/O rate is 35% of em’ers net commission (net = gross-GST, c/a fees and 10%); Subject to the MITT, no allowances payable to a C/O em’ee; The award allows NES entitlements to be paid in advance 31

Understanding commission-only employment THE NES COMPLICATION C/O em’ees are entitled to NES entitlements– annual, personal/carer’s, compassionate leave, notice etc However, award allows these to be paid in advance of their accrual at either the “base” or “full” rate of pay; Award provides definition of “base” and “full” pay rate; Must be over and above the minimum 35% payment; Payment in advance is NOT cashing out the leave. 32

Understanding commission-only employment THE “ALL-UP” COMMISSION RATE IN PRACTICE Base Commission NES Entitlements Superannuation TOTAL 35%10.87%4.13%50% Base Commission NES Entitlements SuperannuationTOTAL 35%15.46%4.54%55% 33

Understanding commission-only employment THE “ALL-UP” COMMISSION RATE IN PRACTICE The em’ee will receive 45.87% of em’ers net comm from each sale with 4.13% paid to nominated super fund. Base Commission NES Entitlements Superannuation TOTAL 35%10.87%4.13%50% 34

Understanding commission-only employment THE NES RECONCILIATION SPREADSHEET DateNES accrual payments ($) Type of NES Entitlement Amt of leave taken (days/hrs) Award value of leave taken ($) BALANCE ($) 5/5/10$ /6/10$421.88$ /6/10A/L22.5 hrs$283.24$ /6/10$809.50$1, /7/10S/L15.2 hrs$231.34$1, /10/10 Notice; A/L 38 hrs hrs $1,388.06$0 ($ ) 35

Understanding commission-only employment C/O EMPLOYMENT CHECKLIST  Has em’ee satisfied the MITT;  Is there a written agreement detailing commission entitlement;  Have restrictions on commission calculations been satisfied (35% of em’er’s net commission)?;  How are NES entitlements to be treated?;  Have you set up a means by which you can track em’ee’s NES payments? 36

Award Modernisation – Clerks Private Sector Award CLERKS – PRIVATE SECTOR AWARD 2010 Occupational award; Covers em’ers in the private sector in Australia with respect to their em’ees engaged wholly or principally in clerical work (unless covered by an industry award). 37

Clerks Private Sector Award …cont’d IMPORTANT CHANGES ItemPrevious AwardModern Award Part-time employment- 2 days & 12 hours per wk- 3 hours Classifications-5 Grades - 5 Levels with year divisions within Levels 1 and 2 Casual Loading-20% plus 1/12 th -Flat 25% Casual engagement- 4 hours- 3 hours Motor vehicle allowance-$83.35/$ OR $0.57 per km - $0.74 per km Payment of Wages- Weekly or fortnightly- Weekly/fortnightly or monthly by agreement 38

Clerks Private Sector Award …cont’d ItemPrevious AwardModern Award Rest Breaks- N/A- 10 minute paid break after 3 hrs work – further break after 8 hrs Ordinary Hours of Work- 7.00am to 7.00pm am to 7.00pm M-F and Sat till 12.30pm Sat/Sun Loading-25% for Saturday hours - 50% for Sunday hours -25% for Sat hours up to 12.30pm - 100% for all work on Sunday. Exemption Clause- 15% above Grade 1 rate- Replaced with Annualised Salary clause Termination of Employment - Em’ee must give one week’s notice of resignation - em’ee must give the same notice of resignation as em’er (based on length of service) 39

Award Modernisation…cont’d PROVISIONS COMMON TO BOTH AWARDS Dispute & Consultation provisions; Access to NES and copy of relevant award; Redundancy; Superannuation  Super choice has applied since 2005  ATO standard form to em’ee within 28 days of employment  Award dictates default funds in event em’ee fails to elect a fund. These funds are: REI Super (National); Asset Super (NSW); Tasplan (Tas)  These funds apply to both awards in our industry Individual Flexibility Agreements (IFAs)  Can be used to alter award provisions related to when work can be performed, overtime rates, penalty rates, allowances and annual leave loading;  BOOT applied;  Administrative procedures must be followed (REEF template). 40

Moving from the Old to the New – “transitional arrangements”! 41

Transitional arrangements…cont’d “…we have decided that any cost increases resulting from the introduction of modern awards should be spread over a lengthy period [5 years]” ”…we have decided to adopt model transitional provisions. While the model transitional provisions can be departed from, departures should be limited.” - The AIRC in its decision of 2 Sept

Transitional arrangements…cont’d Transitional arrangements only affect matters of:  Minimum wages;  Casual or part-time loadings;  Saturday, Sunday, P/H or other penalties;  Shift allowances Matters other than the above commence on 1 January 2010 e.g. paid rest breaks 43

Transitional arrangements…cont’d First step of transitional arrangements (phase- in)commences on 1 July 2010; This means there is no wage increases or penalty rate increases until then. 44

Transitional arrangements…cont’d How do the transitional arrangements operate? Rates, loadings, penalties etc will either decrease or increase over 5 years from 1/7/10; “Transition amount” is the difference between existing condition and that prescribed by the modern award. Changes (up or down) made in 5 instalments – process completed by 2015! 45

Transitional arrangements…cont’d Transitional arrangements in practice! 1. Property m’gt associate (Grade 3) is being paid $ The rate under the modern award is $ The transitional amount is therefore: $ $ = $15.96 On 1 July the em’ee will be entitled to an increase of $3.19 ($15.96 /5); plus any national wage increase announced 46

Transitional arrangements…cont’d Transitional arrangements in practice! 2. Clerical em’ee (Grade 2) is being paid $23.84 p/h for working on Sunday (includes a 50% penalty). The penalty rate under the modern award is double time (100%). The transitional amount is therefore: 100% - 50%= +50% On 1 July the em’ee will be entitled to an increase of 10% (50%/5) in the Sunday loading. Rate increase to $

Transitional arrangements…cont’d Transitional arrangements in practice! “It is inevitable that transitional provisions will involve a degree of mathematical complexity” AIRC

Transitional arrangements…cont’d Wage rate schedule for July 2010?....HEEEELP! 49 A Post 1/1/10 classification B Post 1 /1/10 rate of pay C Pre-1/1/10 classification D Pre-1/1/10 rate of pay E Transitional amount ($) F Transitional adjustment ($) G 2010 National Wage Increase ($) H MIN WAGE from 1/7/10 (total of columns D+F+G) Prop M’gt Associate ……………. Strata M’gt Assoc $ Prop Officer – Grade 1 Grade 2 Grade 3 $ $ $17.86 $0 $ $3.57 $0 $3.19 TBA $597.59* $583.30* $570.53* * Plus ‘G’

Transitional arrangements…cont’d Transitional arrangements in practice! Decreases in any rate/loading/allowance should be treated with caution for several reasons:  the em’ee can ask FWA for take-home pay order to prevent a loss of pay; or  possible contractual obligations to pay existing rate. 50

Transitional arrangements…cont’d Your quick checklist for Fair Work compliance Obtain copy of awards and NES – make available to your em’ees; Assess your operations to ensure compliance with non- transitioned provisions; Ensure compliance with NES; Provide every new em’ee with a copy of FWIS; Check that most recent version of REEF’s template E/As are being used; Have you re-classified your em’ees under the modern award; 51

REEF helping your agency get it right!! REEF HELP 1. REEF members website Workplace Hotline REEF newsletters and Workplace Alert ( service) 4. Member conference – Level 6, 99 Bathurst St SYDNEY 52

enableHR Real Estate enable HR Real Estate is a total on-line HR management system for the busy real estate agency; Over 70 template contracts, guides, forms, letters; Hiring, employee m’gt and termination checklist; Modern award clauses, wage rates and FAQs; Developed by legal and industry specialists; Exclusive to REEF members and a 15% discount. 53