Can Commission-based Financial Advisors Claim Award Entitlements?
In a recent turn of events, the Federal Court overruled the Federal Circuit and Family Court of Australia’s (FCFCOA) decision that ordered a company to pay a substantial sum in compensation to its financial advisor. The FCFCOA found the employee to be covered under the Banking, Finance and Insurance Award 2010 (Finance Award).
Brief Background
The applicant was employed by the company from 2012 to 2019 as a Private Client Adviser and then as an Associate Adviser. His pay was entirely based on commissions.
The applicant claimed that he was covered within the terms of cl B6 of Schedule B of Finance Award (Level 6 classification).
He argued that the company breached the Fair Work Act, 2009 by failing to pay minimum wages, leave loading, and entitlements. He had also alleged a breach of the Fair Work Regulations by delaying access to employee records.
The FCFCOA ordered the company to pay $245,000 in compensation.
Why did the Federal Court overturn the FCFCOA’s decision?
Did not satisfy the definition of a “Middle Manager” under Level 6 of the Award: The employee did not manage a team or control part of the business, which are key requirements for coverage under Level 6 classification.
Job title and income are irrelevant: The Federal Court emphasized that award coverage depends on duties performed, not titles or commission size.
Commissions could offset award or NES obligations: Even if the Finance Award applied, the employee’s million-dollar commissions could be used to offset any shortfall in minimum wages or leave entitlements. However, for offsets to be effective, employment contracts need to clearly define commission arrangements, and payroll records should accurately reflect the payments made.
No proof of traditional award coverage: The employee could not show that his role had been historically regulated by awards, as required by the Finance Award’s exclusion clause.
Key Takeaways
Award coverage is based on duties and not titles or earnings.
Commission payments can offset award entitlements
Employment contracts should clearly state whether a role is award-covered and define how remuneration is structured.
Even cloud-based systems must ensure employee records are accessible and provided within the regulatory timelines.
If you require assistance in reviewing your current employment contracts to ensure compliance with various Awards, Voice Lawyers can assist you. This article is general in nature and is not legal advice. You can contact us at office@voicelawyers.com, or give us a call at 02 9261 1954 or use the link on our website to book a consultation to speak with one of our lawyers.