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Tasmanian Industrial Commission

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T8193

 

TASMANIAN INDUSTRIAL COMMISSION

Decision Appealed - See T8452

Industrial Relations Act 1984
s29 application for hearing of an industrial dispute

Andrew Paul Bryan McCullagh
(T8193 of 1999)

and

Evolution 2000 Real Estate Pty Ltd

 

COMMISSIONER P A IMLACH

HOBART, 20 May 1999

Industrial dispute - alleged breach of Estate Agents Award - arbitrated - application dismissed

REASONS FOR DECISION

This was an application for a dispute hearing made under section 29(1A) of the Industrial Relations Act 1984 (the Act) by Andrew Paul Bryan McCullagh.

Mr McCullagh was in dispute with Evolution 2000 Real Estate Pty Ltd (the Company) over alleged breaches of the Estate Agents Award (the Award). He had been employed by the Company as a real estate sales agent during the period June 1997 to August 1998.

The matter first came on for hearing on Wednesday, 3 March 1999. At that hearing even though Mr McCullagh was present and appearing for himself the Company did not appear and no person appeared on its behalf. The matter was adjourned to another date and the parties were informed that it would proceed ex parte on that day, if necessary.

The second hearing of the application on Tuesday, 16 March 1999 included discussions between the parties and the Commission, but, the dispute was not resolved. At the end of the second hearing the Commission undertook to make some investigations as to practices in the industry generally in relation to a number of matters and then to advise the parties in writing of the resultant conclusions.

At the third hearing on Thursday, 8 April 1999, witnesses were brought and submissions made. At both the second and third hearings the parties represented themselves.

Mr McCullagh's claims were eventually in four parts:

1. He said the company's commission payments to him had always been less than the agreed 40 percent of the full sales commission paid to the company by a property vendor and he sought the alleged balance - $708.51.

2. In addition to everyday house sales and the resultant commission payments to the sales agents, at the instigation of Mr McCullagh, the Company had operated what were called "rental agreements" whereby an intending house purchaser, as well as paying rent for living in the intended house of purchase, also paid regular instalments towards a lump sum deposit to be used in the eventual purchase of the house. In these circumstances commission payments were made on a pro rata basis. Mr McCullagh sought an alleged outstanding amount of $2466.80 in connection with "rental agreements" covering eight properties which were still "alive". The Company has since ceased arranging rental purchase agreements.

3. He sought the payment of an alleged superannuation payment deficiency of $450.00.

4. Mr McCullagh claimed that he had been promised payment (commission) for any business he brought into the Company whether the property concerned was sold before or after Mr McCullagh left the Company's employment.

The Award provided for an employer and a sales agent to reach written agreement at the commencement of the sales agent's employment as to arrangements for sales commission payments. Mr McCullagh pointed out to the Commission that the Company had failed to ensure in his case that such an agreement was formalised. The Company admitted that the written agreement as to sales commission payments required by the award had not been completed with Mr McCullagh, but, claimed that the terms for such payments were well known to its employees at the time because all that kind of information was the subject of advice and discussion at the many staff meetings which took place. The Company said all its dealings and records were available openly to every member of staff and Mr McCullagh had known that and often had assisted in the preparation of or himself produced much of the information involved.

Quite an amount of the Company's relevant records were produced at the hearing by both sides.

The Company said that originally to cover costs it had made a $35.00 deduction from the gross commission received when a property had been sold. The nett Company commission on the relevant sale had then been used as the basis for calculating the 40 percent commission paid to the sales agent who sold the property. The Company further said that after some time it had become clear that the $35.00 deduction was not sufficient to enable the Company to operate profitably hence, the Company said, after discussion and agreement between the staff, the $35.00 deduction was replaced with a seven percent deduction aimed at covering administration costs which included annual leave and superannuation amongst other things. At the same time an eight percent deduction was introduced from the gross commission received by the Company on a "rental purchase" agreement sale of a property. Mr McCullagh claimed he had never agreed to the $35.00 nor the seven percent and eight percent deductions and, generally speaking his claim was for the balance between (a) 40 percent of the gross commission the Company received for each property he sold; and (b) 40 percent of the nett commission the Company had received for each property he sold.

Mr Adrian Martin, a director and the manager of the Company said he had agreed with Mr McCullagh to pay out his superannuation entitlements in a lump sum to him when he left the Company's employment in August 1998. Mr Martin said the Company's accountant had advised him not to pay out the full amount of superannuation entitlements to Mr McCullagh on the basis that a taxation instalment should be deducted first - hence Mr McCullagh's claim for the $450.00 balance alleged to be owing.

The Company relied on the evidence of three witnesses including that of Mr Martin who became a witness to answer questions from Mr McCullagh.

Witness Mr Robert John Davies, an employee of the Company who had worked in the real estate industry for approximately 12 years, said he was aware that deductions for advertising and administration costs were made prior to a salesman receiving his or her commission based upon 40 percent of the nett figure. He said, "It's always been explained to me, every job I've had, that there will be a deduction on the Commission."1 Mr Davies also said that these matters had been discussed at sales meetings during Mr McCullagh's period of employment and there had not been any disagreement at the time.

Mr Davies also said that, in his experience, any property sales listing always remained the property of the company so that when a sales agent left that company's employment the listing reverted fully to the company and was re-allocated to another sales agent. He said, "So, it's actually brought in by the agent but it belongs to the company at all times because it's their name on the company listing, Evolution, or whatever company it is."2

Witness Louise Mary Williams said she had been employed by the Company for about four and a half years and had worked in the real estate industry for about seven years altogether.

Miss Williams said that deductions had been made from gross sales commissions in both the companies she had worked for. She also said that the details of the deductions made by the Company had been well known to her and those matters had been discussed freely in the Company's sales meetings: there had been no objections and Mr McCullagh was aware of the arrangements. Miss Williams also said that, in her experience, once a sales agent left the company all sales listings remained with the company and they were handed over to other sales agents.

DECISION

It is important to note that this dispute relates to sales commission payments allegedly due to Mr McCullagh: there was no dispute over the payment of the minimum wage prescribed for Real Estate Consultants in the Award; the dispute concerned sales commission payments allegedly due after account was taken for the Award minimum wage already paid.

I am satisfied, on the evidence before me, that it was the Company's practice during the time of Mr McCullagh's employment, to make deductions from the gross commission received on the completion of a property sale prior to the payment of the relevant commission to the sales agent involved. Initially these deductions were for $35.00 only, but, later a further seven to eight percent was introduced. Generally speaking it was the established practice of the Company to pay 40 percent of the nett commission to the agent responsible for each sale. In some cases, because of the role played by an agent in a sale, a 20 percent commission or a token amount was paid by the Company. In all these circumstances I am satisfied on the evidence that Mr McCullagh knew all about the established practices of the Company in relation to a sales agent's commission payment arrangements and, at the time, accepted them.

Whilst under the Award, the primary responsibility for arranging the signing of a written sales commission agreement was with the Company, it was also in Mr McCullagh's own interests to ensure that such an agreement was completed. It is not within the Commission's jurisdiction to make an order relating to the Company's failure to effect the agreement.

For all these reasons I reject the applicant's claim that he was paid less than the agreed commission rate. Whilst the private note from Mr Martin, written after Mr McCullagh had left the Company's employment, tendered by Mr McCullagh, did say "... good support from management, 40 percent of gross commissions ..."3 Mr Martin said about that, in explanation, "It would always would have meant after deductions. The deductions have been in place since we opened the Company, Mr Commissioner, in 1994." ... "So that letter I sent to Andrew would have been in good faith to give him a bit of motivation in life and I certainly wouldn't have gone against my own company policy."4 I accept Mr Martin's explanations.

I am satisfied from the records of the Company that the amounts recorded and paid as agents' sales commissions were consistent with the explanations given by Mr Martin and were correct. The same applies for those "rental agreement" properties not yet completed and for which the Company acknowledged some sales commission payments would be made to Mr McCullagh if and when those particular sales were completed: it was not certain that all such sales would be completed.

Again on the evidence and in the absence of any written agreement on the subject I accept that once an employee has left employment he or she cannot expect to receive sales commission payments for properties sold after the departure.

The superannuation clause in the Award requires that contributions be paid into the named appropriate fund. Because of the circumstances of this case the Commission is not prepared to make an order as to superannuation contributions for Mr McCullagh, but, will do so upon confirmation that the amount already paid to Mr McCullagh as a superannuation payment has been refunded to the Company so that it may pay into the relevant fund the full amount of superannuation contribution due on Mr McCullagh's behalf.

Near the end of the hearing Mr McCullagh disputed an amount of $618.00 referred to as a vendor paid bonus in an exhibit submitted by the Company. Mr Martin was unable to answer the point immediately, but, at the request of the Commission, agreed to investigate and report back in writing. In a letter dated 21 April 1999, Mr Martin agreed without prejudice that the correct amount was $715.00, the actual difference being $96.08.

The Award prescribes that a minimum wage per week be paid to a real estate sales agent and for an agreement to be drawn up to provide for the amount of commission to be paid to the agent on the sale of a property. The Award also provides that the amounts paid as wages may be offset against the total of the sales commissions earned by an agent. In this case I am not satisfied that the total of all sales commission payments due to Mr McCullagh was sufficient to offset all the monies paid as wages to Mr McCullagh under the Award. It may be that, if and when all commissions remaining due on rental purchase agreements arranged by Mr McCullagh are paid, some residual balance will become payable, but, that is a matter for the future.

For all these reasons I dismiss the application and I so order.

 

P A Imlach
COMMISSIONER

Appearances:
Mr A P McCullagh for himself
Mr A Martin (16.03.99, 08.04.99) for Evolution 2000 Real Estate Pty Ltd

Date and place of hearing:
1999
March 3
March 167
April 8
Hobart

1 See Transcript p.21
2 Supra pp. 22 & 23
3 Supra p.18
4 Supra p.19