Paying Annual Leave for Commission-Only Real Estate Employees

When it comes to annual leave, commission-only arrangements can get tricky – but under the Real Estate Industry Award 2020, the rules are clear. Even if an employee earns their income through commissions, they still have the same right to paid annual leave as any other full-time or part-time worker. 

Full-time employees are entitled to four weeks’ annual leave in line with the National Employment Standards (NES), with part-time employees accruing leave on a pro-rata basis. 

Under clause 16.6(a) of the Real Estate Award, commission-only employees must be paid for their annual leave when the leave is taken, at no less than their base rate of pay – that is, the minimum wage for their classification level (see clause 14.1). For example, a commission-only Level 2 Real Estate Employee must be paid at least the base rate of pay (which as of 1 July 2025 is $28.12 per hour) while on annual leave. 

Employers may choose to pay a higher rate but should check the employee’s contract first. If the contract specifies a higher rate, that amount overrides the Award. Employers should also note that paying above the minimum may create an ongoing contractual entitlement to that higher rate for future periods of annual or personal leave. 

Under the Real Estate Award and NES, employers cannot prepay annual leave through commission payments. Leave must be paid at the time it is taken. 

However, if a commission-only employee earns above the minimum commission rate (currently 31.5% of the employer’s gross commission, per clause 16.7(f)), the employer may deduct the value of the annual leave payment from the employee’s incentive commission after the leave is taken and paid. 

Irrespective of how the payment is managed, employers should keep clear records of all annual leave taken and the rate paid. 

Historically, commission-only arrangements have been managed in different ways, but employers should now review their current practices to ensure compliance with both the Real Estate Award and the NES. 

It is important to note that this article applies to national system employers covered by the Real Estate Award. Different provisions apply to state system employers (such as sole traders and partnerships). 

At Business Law WA, our team of Workplace Relations experts can assist your business with ensuring that any commission only arrangements are compliant with the relevant legislation and industrial instruments, whilst simultaneously reducing the risk of underpayment. We can provide legal advice on:    

• Employment contract reviews;  

• Pay calculations and compliance audits;   

• Managing underpayments or non-compliance;   

• Record keeping obligations; and  

• Compliance with modern awards, including flexibility terms.