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Minimum wage is no ‘storm in a teacup’

MAIN IMAGE: Howard Markham, Rebosa head of special projects.

The new National Minimum Wage Act has ramifications for interns, estate agents and agencies in SA’s real estate now. Rebosa’s head of special projects, Howard Markham, explains why this is a critical issue that can no longer be ignored.

Markham says both principals and estate agents can’t afford to miss out on two roadshows Rebosa will host in Cape Town and Gauteng. During these events Anastasia Haji-Pavlou, director of legal firm STBB, will unpack the practical implications of the Act for the real estate industry. The first event takes place on 8 October at The River Club in Cape Town – register here*.

He answers some questions agents have posed about the roadshow:

1. Does the NMWA (National Minimum Age Act 2018) really affect estate agents right now?

Yes, it really does as it is leading in a new era in the way in which estate agents are engaged and the way they make a living. It has strong implications for interns, agents and real estate business owners.

How you may ask? A few examples are:

  • Agents who go through periods of no earnings can seek some relief through this Act.
  • This Act will definitely have an impact on how agents are likely to be performance managed now and agents need to know how and why.
  • The question of “stipend” or earnings for interns before they earn their first commissions, so often ignored, cannot be ignored any further.
  • The recruitment of agents, especially interns will be very different from the past.
  • The mentoring of interns will come under the spotlight.
  • The attention to the path of becoming a full status agent will have to change.

2. If I don’t go to the roadshow will I miss anything?

If you look at the examples I gave for the first question, there is no doubt that missing out on this roadshow will mean not knowing the mechanics of this Act and how it can positively affect agents and agencies alike, especially in their pockets and in their business relationships. I expect that the need for a new dialogue between agencies and agents will come into focus after the roadshow to develop a win-win for all in the future.

To quote Adv. Mullins, “It will be necessary to reinvent the real estate remuneration model to strike a balance between what is fair to the agent and what is fair to the business owner. The real estate industry is at a crossroads as far as remuneration models are concerned.

Knowledge is important as ignorance will not be bliss in this case.

3. Is this just another proverbial South African “storm in a teacup”?

Definitely not! This Act is no longer a “conversation piece” or a public participation process. November 2018 has brought this Act into law and it has ramifications for both full status agents, interns and agency business owners now! It cannot be ignored.

4. Why have we not been hearing anything about this before now?

Like many changes that go on in South Africa we are so used to them being “storms in a teacup” and our ignoring them has little or no effect on us at all. South Africans are really well practised in the art of “hiding our heads in the sand” as generally, it is the best way of staying focussed on what we are doing and not becoming distracted by the winds of change. This is not, however, one of those matters.

5. Why is there so much noise about this, all of a sudden?

The primary reason behind this is the fact that the Minimum Wage Act coupled with the imminent Property Practitioners Bill has a real impact on real estate.

Advocate Mullins in his recent article “Minimum Wage or maximum earnings”  notes that “The real estate industry is facing a perfect storm with the imminent convergence of both the National Minimum Wage Act and the soon-to-be-promulgated Property Practitioners’ Act. These new laws will introduce a legislative regime that will be a game-changer. Property practitioners, in particular business owners, should prepare for the inevitable impact that will occur when both of these Acts are fully implemented”

6. What are the agency bosses saying about this? Do they care?

Some agencies commented on the matter in Industry reacts to minimum wage, but apart from that I have not seen any recent press releases on this subject from agency business owners, so it is difficult to gauge what they are thinking or saying about this. This does not, however, mean that there is not any comment out there.

7. Is there anything in it for me as an estate agent?

The short answer is yes. The long answer will also conclude with a resounding “yes”. The roadshow will endeavour to provide the longer answer.

8. When will it affect me?

The NMWA is already enacted and therefore it affects all real estate stakeholders NOW.

9. If I just ignore this and get on with my real estate life, is this OK?

This is an option, and yes, it might be OK. However, as with many “head in the sand tactics”, ignorance may not be bliss at all. If you are an agent you could be missing out financially or suddenly discover your business relationship and performance management suddenly starts changing.

If you are a business-owner you may not be aware of the budget impact this could have on your business if you are unprepared. Don’t miss this!

The commission-based structure has been part and parcel of the real estate industry almost from the start. In recent years a few online start-ups have brought in basic salaries for agents, but most agencies have kept the commission-based structure. This meant that most interns and new estate agents had to survive financially until they earned commission on their first sale, which could take a few months.

For South African agencies this scenario changed when the new National Minimum Wage Act (NMWA) was promulgated into law at the beginning of 2019. The Act states that all workers, a term which could apply to most estate agents, are eligible to be paid the minimum wage of R3 500/month or R20 per hour. Find out more in ‘Estate agents could qualify for minimum wage

This development holds immediate implications in terms of the structure of the contracts that estate agencies sign with their interns and agents as explained by Adv Kevin Mullins in Minimum wage or maximum earnings?.

(*The event in Cape Town was cancelled. Editor)

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