T4636
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Australian Municipal, Administrative, Clerical and Services Union ESTATE AGENTS AWARD
Award variation - car and telephone allowances REASONS FOR DECISION This application by the Australian Municipal, Administrative, Clerical and Services Union (the Union) sought the variation of the Estate Agents Award to provide for a car allowance and telephone allowance in the following terms:
The variation was requested to be made by way of the inclusion of a new clause in Division B of the award relating to Conditions for Employees in Division B - Salesmen, Saleswomen and Managers. Mr Clegg, appearing for the Union, submitted that the classifications the claim impacted upon were those set out in Clause 7 - Definitions and related to "Real Estate Sales Consultant", "Real Estate Sales Trainee", "Manager", "Property Manager" and "Auctioneer". For convenience employees in those classifications will be referred to as sales consultants. Mr Clegg submitted that the New Allowances Wage Fixing Principle permitted the inclusion in the award of a car and telephone allowance because they would provide for the reimbursement of expenses incurred by sales consultants. It was stated by Mr Clegg that sales consultants were required to travel "far and wide" (Transcript p.29) in order to obtain listings and to make sales. This was disputed by Mr Clues, appearing for the Tasmanian Chamber of Commerce and Industry Limited (TCCI), who contended that it could not be claimed, having regard to Exhibit ASU3, that sales consultants travelled far and wide. His submission was that reference to newspaper advertisements in Exhibit ASU3 could not establish the travelling requirements of sales consultants. However it was acknowledged by Mr Clues:
Specifically the survey material presented by Mr Clues in Exhibit TCCI5 showed that sales consultants travelled, on average, 795 kilometres a week. Therefore whilst arguably travel "far and wide" may not be involved, sales consultants nevertheless undertake a significant amount of travel having regard to average weekly kilometres. Mr Clegg submitted that a fully maintained vehicle, based on RACT information, exclusive of fringe benefits tax and fringe benefits tax for parking was a little over $225 a week for a Berlina and $200 a week for a Magna Executive. Those costs were based on a three year ownership period travelling 15,000 kilometres a year (Exhibit ASU4) excluding four weeks annual leave. Mr Clues argued strenuously that the Union's claim was "not based on RACT figures" (Transcript p.60). He said Mr Clegg had relied upon costs for running a vehicle for a business and not those incurred by an individual. Mr Clues also informed the Commission that the RACT differentiated between "old cars and new cars" (Transcript p.60) engine size and vehicle turnover. He said that there was comprehensive RACT material on a multiplicity of variables relating to motor vehicle running costs which were ignored by Mr Clegg. A further plank in Mr Clegg's submission related to yearly earnings of sales consultants. Having regard to data contained in Exhibit ASU5, Mr Clegg stated that the average income, based on 1992 material, was $19000 per annum for sales consultants. Mr Clegg contended that after meeting vehicle and telephone costs not much income was left to meet lifestyle and family costs. The point was made by Mr Clegg that his members were "sick of using their own cars and telephones and not being reimbursed for their usage" (Transcript p.35). He attributed high employee turnover in this industry to too many people being in it and to the costs that sales consultants were expected to bear, such as car and telephone operating costs which he said were not adequately provided for by the commission earnings system. Mr Clegg submitted that the market place was not big enough to sustain the number of sales consultants in the industry and supported this by reference to statistical information contained in Exhibit ASU7 relating to real estate agents' licence renewals. This was demonstrated in the following terms:
Mr Clegg contended that "the drop out rate" (Transcript p.42) was increasing because there was not enough money in the industry. He said that employees in the real estate industry should be reimbursed the same as any other employee subject to awards of this Commission who are required to use their motor vehicles and telephones. As well, some interstate examples tendered as exhibits, where these costs were provided for by way of an allowance, were referred to by Mr Clegg. Reference was also made to the General Conditions of Service Award applicable to State employees in Tasmania where a kilometreage allowance is applicable in specified circumstances. With regard to the telephone allowance claimed by the Union, Mr Clegg stated that the real estate industry relied on communications and for sales consultants to respond quickly to potential vendors or purchasers. I was informed by Mr Clegg that home telephone numbers and mobile numbers were listed in newspaper advertisements, on business cards and on signs on properties. Mr Clegg made the point that mobile phones were costly to use with an average cost of around $40 per month. He submitted that the telephone was a vital tool for a sales consultant. Mr Clegg submitted that in the event an employee was provided with a fully maintained vehicle and telephone, the allowances claimed would not be applicable. Mr Clues asserted that the $19000 yearly earnings discussed by Mr Clegg represented:
He said it was wrong for Mr Clegg to make the assertion that $19000 per annum represented an amount from which telephone and car running costs had to be deducted. Mr Clues referred to a 1994 Real Estate Institute of Tasmania survey which indicated average earnings of $27447 excluding earnings of those sales consultants who were in the top 20 per cent earning category. This was reflected in Exhibit TCCI12. Also in respect of the yearly earnings of $19000 per annum advanced by Mr Clegg by reference to Exhibit ASU5 an article by Mr D. Pilling, Mr Clues, by virtue of Exhibit TCCI14, was able to cast doubt on the relevance of these earnings. That latter exhibit, a commentary by Mr Pilling, indicated that the average earnings figure of $19000 needed to be at least qualified in the following terms. Mr Pilling stated:
Mr Clues also criticised the submission made by Mr Clegg in respect of the turnover rate stating that nothing was put to the Commission to substantiate that the introduction of the claimed allowances would reduce it. With regard to interstate comparisons made by Mr Clegg, Mr Clues submitted that the amounts paid in those States were marginal to what was claimed in this matter. The cost of the car allowance was further exacerbated because as well as claiming a flat $225 per week, 35c per kilometre for each kilometre after 400 kilometres was also being sought. Mr Clues submitted that the Union's claim should be rejected because:
The centrepiece of the submission made by Mr Clues was a survey taken of the industry by the Real Estate Institute of Tasmania and the TCCI. Mr Clues said that 86 managers and directors and 255 sales consultants responded to the survey information that was sought. I was informed that the survey showed that there was strong rejection of the Union's claim by employees. Specifically 86.7% of sales consultants did not want a telephone allowance and 82.2% did not want the car allowance to be pursued. This appeared to be predicated upon a concern that the claimed allowances would diminish the level of commission earnings which were considered to be vital to the incentive-based nature of the industry. A great deal of emphasis was placed by Mr Clues on the survey results. He stressed that the survey was undertaken in an open and honest manner. With regard to earlier concerns raised by Mr Clegg that employees were fearful and were being intimidated about responding to the survey questions in an open and frank manner, Mr Clues informed the Commission that the Union's concerns were raised with the industry following Commission proceedings on 15 December 1993. Exhibit TCCI3 was a copy of a notice issued by the REIT to its members which, among other things, cautioned employers to not influence employees and the potential for any employer interference to destroy any credibility that may be attributed by the Commission to the survey outcome. Mr Clues submitted that the "sheer volume of response" (Transcript p.78) was testimony to the strong feeling of employees against the allowances claimed. Mr Clues submitted that the cost of the claim for a car allowance would impose a "huge increase on employers" (Transcript p.80). Based on the claim and the average kilometres travelled, i.e. 795 kilometres per week, the average cost would be $363.25 per week for the car allowance. Mr Clues extrapolated this figure by adding the retainer of $325 per week that is paid to each sales consultant. He then compared this, erroneously in my view, to the tradesperson's rate of pay submitting that on the base allowance claimed for a car of $225 per week plus the retainer of $325 per week, sales consultants would be on a relativity of 130 per cent of the tradesperson's rate. Mr Clues confused the allowance for reimbursement of expenses with a total wage rate. Clearly the allowance, if justified, has no part to play in establishing wage rate relativities. The relativity part of Mr Clues' submission was a nonsense argument. Mr Clues highlighted what he considered to be deficiencies in the Union's claim. These may be summarised as follows:
Mr Clues said that the RACT made a distinction between private and business ownership. Exhibit TCCI6 indicated that a privately owned Holden Berlina, new to 5 years old, would cost $147.98 per week to run based on 15000 kilometres per annum. A Holden Barina would cost $93.00 per week for the same annual kilometreage. Those costs were significantly different to those relied upon by Mr Clegg which were derived from RACT information relating to business ownership of vehicles. Mr Clegg also indicated that age of vehicle was not an issue as most sales consultants travel in a late model vehicle. Mr Clues reiterated that the claim should be considered having regard to the level of commission earnings and the capacity for travelling and telephone expense to be offset as tax deductions. He said:
Mr Clues submitted that what he regarded to be flaws in the Union's claim together with the survey results which were heavily against the claim, mitigated against the Commission substituting its own views in terms of awarding an amount of money. Mr Clues submitted:
Telephone Allowance: Mr Clues submitted that the claimed telephone allowance would add to the overall cost burden to employers in the event both claims were accepted by the Commission. Mr Clues also considered that this claim had certain flaws including:
Additionally, Mr Clues submitted that work related telephone calls made from an employee's residence may be claimed as a tax deduction. He said that in the circumstances it was difficult to understand the reasons for the Union's claim. The survey documentation presented by Mr Clues showed that 86.7% of those in the survey did not wish this claim to be pursued. Mr Clues submitted that:
and later:
Decision It is clear that the Union's claim predicated upon a uniform rate of reimbursement for the use of motor vehicles provided by sales consultants to undertake their work is not able to be sustained. Without traversing all of the submissions and material presented by Mr Clues, the inescapable conclusion is that in respect of motor vehicle operating costs numerous variables are involved. The most obvious of those relates to engine capacity. To ignore that fundamental difference in addition to that which exists between private and business ownership costs suggests, in my opinion, a total disregard for the concept of reimbursing expenses actually incurred as is the intent of the New Allowances Wage Fixing Principle. The arguments advanced by Mr Clegg that the claimed rate, that is a flat rate of $225 a week and 35 cents per kilometre when over 400 kilometres are travelled in a week, was relied upon for the sake of simplicity, or as he said "it's the simple way to go" (Transcript p.147), highlights the broad brush approach that was adopted by the Union. Vehicle age, i.e. the difference in operating costs between new and old vehicles would also impact on the amount that may be reimbursed, albeit I accept that generally later model vehicles would be used by sales consultants. As well as the foregoing difficulties with the Union's claim heavy emphasis was given by Mr Clues to the outcome of a survey as discussed earlier in this decision. Whilst most were against the introduction of the allowances in the award the question is what weight should be attributed to the survey document? I accept that the TCCI and the REIT took reasonable steps to ensure that the survey was undertaken in a fair manner and I do not question this aspect. My concern goes more to balancing a survey like the one here with what may be the merits of a case notwithstanding what may be popular opinion. On balance, however, I have decided that reasonable public interest weight should be given to the survey document, particularly as every opportunity was provided to the Union to bring contrary evidence before the Commission. At one stage the proceedings were adjourned for the Union to present witnesses but this did not eventuate. In the final analysis I have concluded that it would not be appropriate to interfere with the current arrangements which enable telephone and vehicle costs to be claimed as tax deductions. I was also persuaded by the strength and conviction of the submissions made by Mr Clues which were that the claimed allowances should be rejected because of the overwhelming commitment to the existing commission earnings system by employees and employers alike and which was said by Mr Clues to embrace "such expenditure" (Transcript p.69). For all of the foregoing reasons the claims by the Union are not supported.
R.K. Gozzi Appearances: Date and Place of Hearing: |