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8.7 Earnings from commissions
Entitlement to commissions is payment in return for labour, where that labour results in a sale (i.e. of a car, a mortgage, insurance etc.). Commissions are often paid at a later date than the date of the sale i.e. paid on a monthly basis. These amounts are considered to be actual earnings and should be included in calculations in the period that the labour the commission was derived from was undertaken.
As commissions may be paid at a later date than the period of the labour (which may span several weeks or months, for example when working as a real estate agent selling houses) it may be impractical to establish which period the commission should be applied too, an alternative method of calculation can be considered i.e. deemed based on those earnings for any periods in the future or deemed using a notional rate established from award/industry rates (section 8.5.2).
It is important to note that a person cannot have an AE during periods where they are medically certified as totally incapacitated for employment.
Example – Commissions paid on a 4 weekly basis
Bill works full time as a used car salesman and earns $649.66 per week. His NE as a Corporal is $1,124.65 per week. He has an entitlement of $474.99 per week. Once every 4 weeks, he receives commissions on the sales he has made for that month and for that week he earns $649.66 plus $586.20 in commissions. His salary over the 4 weeks is:
(4 x $649.66) + $586.20 = $3184.84 divided by 4 = $796.21 per week. The delegate may choose to apply this amount to the retrospective period or treat the person’s earnings as fluctuating earnings and apply the policy under section 8.5.
8.7.2 Trailing Commissions
Generally, where a person is receiving trailing commissions it is impractical to retrospectively apply those earnings to the period in which the labour they were derived from was undertaken. Trailing commissions may be received many years after the original sale was made and are often paid annually. In these cases the person’s earnings should be deemed based on those earnings for any periods in the future or deemed using a notional rate established from award/industry rates.
A person may continue to receive trailing commissions even when they are totally incapacitated for work. In these scenarios the commissions can not be considered actual earnings (as they were derived from a previous period of labour).