Employed Salesperson vs Independent Contractor in Queensland Real Estate: Commission Implications
A senior salesperson approaches you with a proposal: they want to restructure as an independent contractor. They’re generating strong results, they want more flexibility, and they’ve heard the split is better. It sounds straightforward. It isn’t. The distinction between an employed salesperson and an independent contractor in Queensland real estate carries significant implications for how commission flows, what the agency owes, and what the law permits — and the consequences of getting it wrong fall squarely on the principal.
The Legal Framework: Two Different Relationships
The distinction between an employee and a contractor is that an employee works within the agency as a representative of the agency’s business under a contract of service, whereas a contractor operates their own business and may provide services to the agency’s business under a contract for services.
That difference in legal character sits at the heart of every commission implication that follows. Under the Property Occupations Act 2014 (Qld), the rules governing who can be engaged to carry out real estate salesperson functions are strict. A real estate agent must not employ, as a real estate salesperson, a person the agent knows, or ought to know, does not hold a registration certificate. Critically, the Act draws a hard line around contractor status at the licence level: a real estate agent must not directly engage an independent contractor as a real estate salesperson unless the independent contractor holds a property agent licence.
This is the structural divide that separates Queensland’s two engagement models. A registered salesperson — someone holding a registration certificate but not a full agent’s licence — can only work as an employee. To operate as a genuine independent contractor within a Queensland real estate agency, the individual must hold a full real estate agent licence. Overlooking this requirement creates an immediate compliance exposure for the principal, with the Act prescribing a maximum penalty of 200 penalty units per contravention.
How Commission Flows Differently Under Each Model
The practical effect of employment status on commission is profound, and it begins with a rule most agents know but principals sometimes underestimate. Commission paid by a vendor belongs to the agency, not to the individual who performed the sale. The Form 6 appointing the agency creates the entitlement. What flows to the salesperson — whether as a commission share, a bonus, or a fee — is then governed by the arrangement between the agency and that individual.
For an employed salesperson, that arrangement is governed by the Real Estate Industry Award 2020 (MA000106) and any individual employment agreement layered over it. Where the employer and the employee agree that, in addition to the minimum weekly wage, the employee will be entitled to a portion of the commission paid to the employer, then any method of calculation or any formula for calculating the amount of commission that will be payable to the employee must be evidenced in a written agreement. That written requirement is not optional. The intent of Part 13 of the Award is to provide a framework for the regulation and centralised monitoring of all commission-based employment arrangements in the real estate industry, acknowledging the heavy reliance by employers on offers of commission entitlements not just as a means of remuneration, but also as a recruiting tool, to ensure that any offers of commission entitlements are both recorded and enforceable.
For an independent contractor operating under a genuine contracting arrangement, the commission split is instead governed by a commercial agreement — a contract for services — negotiated between the agency and the contractor’s entity. The Award does not apply. Persons who work as independent contractors in the property industry are not covered by the new award. This means no minimum commission floor, no MITA obligation, and no leave-loading withholding requirements — but it also means no safety net for the contractor and, critically for the principal, no Award protection if a misclassification dispute arises later.
Commission-Only Employment: The MITA Rules
Within the employed salesperson model, commission-only arrangements remain the dominant structure in Queensland’s sales-focused agencies. But the pathway to lawful commission-only employment is tightly regulated under the Real Estate Industry Award 2020, and the threshold is a moving target.
Commission-only employment has strict eligibility rules and is only allowed for experienced, full-time employees who meet a specific income threshold. Employers must ensure they are not misclassifying employees under this arrangement. To be employed solely on commission, an employee must be classified at Level 2 or higher in the Award, hold a real estate licence or registration, be at least 21 years old, have at least 12 consecutive months of experience in sales or leasing within the last 3 years, and have earned at least 125% of their minimum classification rate in the past 12 months — the Minimum Income Threshold Amount (MITA).
The MITA for commission-only salespeople increased to $69,634 commencing 1 July 2025. This is not a fixed number — it adjusts annually with National Wage Case decisions. Principals who have not reviewed their commission-only arrangements since the last 1 July wage increase may already be operating outside the Award’s requirements.
Commission-only employees must be paid at least 31.5% of the employer’s gross commission. This minimum share applies per transaction, not as an annual average. An agency cannot pay a lower rate on a run of smaller deals and average it out across the year. The new Real Estate Industry Award requires the gross income of a commission-only employee to be reviewed annually. This annual review is mandatory. If the review establishes that the gross income of the commission-only employee for the year under review was less than the MITA, the employee is not permitted to continue being employed on a commission-only basis. If an employee continues to be employed on a commission-only basis after failing an annual MITA review, serious consequences may potentially flow for employers, including penalties for breach of the award and underpayment claims.
The pathway back from a failed MITA review is also prescribed. Under the Award, if an employee fails to meet the minimum standards to be employed on a commission-only basis, the employee must then be placed onto a salary. This cannot be done by simply telling the agent their arrangement has changed — the employment contract, performance criteria, and HR policies all need to reflect the transition formally.
The Independent Contractor Structure: Appeal and Obligation
It is not uncommon for principals of real estate agencies to be approached by senior sales agents seeking to negotiate an appointment to perform their services as independent contractors rather than direct employees of a real estate agency. The appeal is mutual. An agent who works as a contractor often has the potential to earn more money than they might as an employee, and contracting affords the agent increased flexibility in terms of how, when and for whom business services are performed. Similarly, principals of agencies may see benefit in appointing contractors given that contractors are not entitled to annual leave or sick leave entitlements, or minimum wage entitlements. Independent contractors are also responsible for paying their own income tax and, in most (but not all) instances, their own superannuation contributions.
Those benefits are real, but they only materialise within a genuine contracting relationship. There is little doubt that independent contracting agreements may afford benefits to both the contractor and the real estate agency when the relationship is formed for genuine reasons of independence. However, the decision to enter into an independent contracting agreement is one which needs to be carefully considered. Such an arrangement must not be put in place merely for the purpose of avoiding the agency’s obligation to pay employee entitlements such as annual leave, sick leave, payroll tax and/or superannuation.
The commission split in a genuine contractor model is agreed commercially. Industry practice typically sees contractors retaining a higher percentage of the gross commission received by the agency — splits of 50/50 through to 80/20 in the contractor’s favour are not uncommon, reflecting the contractor’s assumption of their own business expenses, tax obligations, and insurance costs. The agency retains the brand, the trust account, the Form 6 authority, and the exposure to regulatory risk.
Sham Contracting: The Exposure That Damages Agencies
The critical risk for Queensland principals is the territory between genuine contractor and disguised employee — what the Fair Work Act 2009 (Cth) identifies as sham contracting. Sham contracting arrangements are sometimes set up by businesses to avoid paying legal entitlements to employees.
The 2022 High Court decisions in CFMMEU v Personnel Contracting [2022] HCA 1 and ZG Operations v Jamsek [2022] HCA 2 changed how courts determine the nature of the relationship. In the past, a multi-factorial test was applied to determine whether an individual was an employee or a contractor, having regard to various indicia such as workplace control, mode of remuneration, provision of tools and equipment, responsibility for insurances and business expenses, the entitlement to perform services for multiple businesses, the vesting of goodwill, and the ability to sub-contract or delegate the performance of the services. However, in 2022, the High Court departed from that position by finding that the terms of the written agreement in place between the parties provide the mechanism by which the nature of the relationship is to be determined.
The relationship between the parties should be determined by reference to the rights and obligations under the contract and not any ‘label’ that the parties might seek to attach to the relationship. These decisions reinforce the importance of parties clearly and comprehensively documenting their rights and obligations in a written contract to minimise the risk of any later disputes about the nature of their legal relationship.
The practical implication: labelling someone a contractor in a document is not enough if the actual rights and obligations described in that contract look like employment. Where a principal requires the individual to work exclusively for the agency, and otherwise wishes to maintain ultimate control over the performance of the individual’s workplace activities, a contracting agreement will generally not be appropriate.
The Penalties Are Substantial
Principals should not treat this as a theoretical risk. Civil penalties of up to $93,900 for corporations and up to $18,870 for individuals can be imposed for each breach of the sham contracting provisions. If sham contracting is proven then, in addition to the civil penalties, the employer would be required to back pay the individual found to be an employee all employee entitlements, including superannuation.
The defence standard also tightened under the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024. From 27 February 2024, there are changes to the defence to misrepresenting employment as an independent contractor arrangement. The current test that an employer didn’t know and wasn’t ‘reckless’ when entering into sham contracting arrangements changed to a test of ‘reasonably believed’ — meaning the employer thought it was an independent contracting arrangement (with certain factors applying). In practice, this means principals who have obtained qualified legal advice and structured their contractor arrangements properly will be in a far better position than those who simply adopted a contractor label because it suited their cost structure.
What Changes When an Agent Leaves Mid-Campaign
One of the most practically contested commission questions under both structures concerns the agent who departs before a deal they started reaches settlement. The rules differ materially between the two models.
For employed salespersons, the Real Estate Industry Award 2020 addresses this directly. There are specific guidelines in the Award in relation to commission payments and splits if an employee leaves their employment prior to the settlement of a property that they have listed and/or sold. If a salesperson leaves the employment of an agency and they have listed a property and it has exchanged, they are entitled to the commission when the property settles. In addition, if a property that they have listed has not exchanged when they leave employment of that agency, and then the property exchanges whilst it is still in the exclusive listing period, that salesperson is entitled to the listing component of that commission, as detailed in their employment agreement.
Naturally, if the salesperson is terminated for serious misconduct, the commission is limited to properties that have exchanged prior to their termination.
For independent contractors, the commission entitlement on departure is governed by whatever the commercial contract specifies. There is no Award safety net. If the contract is silent or ambiguous, the outcome is a commercial dispute — and commercial disputes in real estate can be expensive to resolve. A well-drafted contractor agreement will address unconditional exchange dates, settlement contingencies, and listing attribution explicitly.
GST, ABNs, and the Tax Dimension of Commission Splits
The tax treatment of commission flows diverges sharply between the two models, and it affects the gross figures that both parties are negotiating around.
An employed salesperson receives their commission share as employment income. The agency deducts PAYG withholding, contributes superannuation at the Superannuation Guarantee rate (currently 12% of ordinary time earnings), and issues a payment summary. The salesperson’s net take is after tax and includes compulsory super on top.
An independent contractor (or their entity) invoices the agency for services rendered, charging GST on the invoice. The agency pays the invoice amount (inclusive of GST), claims the GST back as an input tax credit, and the contractor’s entity remits the GST collected. No PAYG withholding applies. Superannuation obligations can arise depending on the nature of the arrangement — the ATO’s contractor tests under the Superannuation Guarantee (Administration) Act 1992 (Cth) are separate from the Fair Work analysis and should not be assumed away simply because a written contractor agreement exists.
This tax and super structure means the nominal split percentage in a contractor arrangement is not directly comparable to the split in an employment arrangement. A contractor retaining 60% of gross commission is paying their own tax and super from that 60%. An employee retaining 40% after-tax is receiving super on top. Agents negotiating their structure — and principals pitching to recruit contractors — need to model the actual net position, not compare percentage labels.
What This Means for Queensland Agents and Principals
The employed salesperson vs contractor commission question in Queensland real estate is not one arrangement that suits all situations. Each structure carries different obligations, different financial outcomes, and different legal risks for both parties.
For principals running multi-agent teams, the core obligations are clear. Commission-only employment under the Award requires a written agreement, MITA qualification, an annual review, and a minimum commission floor of 31.5% of gross commission per deal. From 1 July 2025, the MITA has increased to $69,634 — update your annual review processes accordingly. Where a commission-only employee does not meet the MITA on review, the Award mandates a transition to salary rather than simply terminating the arrangement.
For principals contemplating a contractor structure, the licence requirement is non-negotiable: a real estate agent must not directly engage an independent contractor as a real estate salesperson unless the independent contractor holds a property agent licence. If the individual holds only a registration certificate, they must be employed, not contracted. And if the individual holds a full licence, the contracting arrangement still needs to reflect a genuinely independent business relationship — not employment in contractor clothing. These decisions reinforce the importance of parties clearly and comprehensively documenting their rights and obligations in a written contract.
For salespersons evaluating their own structure, the practical question is what the net position looks like after accounting for tax, super, leave entitlements, and business expenses — not just the headline split percentage. A higher contractor split often reflects a genuine transfer of business risk and operating cost. Understand what you are actually giving up before agreeing to transition.
For both parties, the departure commission issue deserves explicit drafting. The Award provides a clear framework for employed salespersons; contractor agreements do not. Make sure the written contract addresses what happens at exchange, at settlement, and at separation — before those events occur.
Getting this right protects the agency’s cost structure and its regulatory standing. Getting it wrong invites Award underpayment claims, Fair Work penalties, ATO scrutiny, and — in the case of misclassified contractors — back-payment exposure that can extend years into the past.