It is official: estate agents are employees. Gone are the days when real estate companies could "window dress" or disguise the relationship between the estate agent and the principal or owner of the business (the employer).
This is according to Linda Erasmus, CEO of Fine & Country South Africa, who says that in earlier days it was common practice for estate agents to act as “independent contractors”, although the agent operated only under one brand name.
There are various reasons why this application suited the principal, nowadays the 'employer', and the agent, nowadays the 'employee', she says.
The nature of the business allows for much freedom of the estate agent and for little control by the principal. These circumstances have paved the way for the so-called “independent contractor’s contract”.
This law has since changed and, under the current labour law, the estate agent, operating under one brand, is regarded as an employee. Today, she says estate agents work in a much more controlled environment and rely heavily on the systems, marketing and promotions which a company provides.
Erasmus says that many estate agents are still working with the illusion of being an independent contractor, and are often misguided by their principals, who have never come to grips with the new labour law.
Many estate agents are employed without a valid contract under South African law terms. Even well-known brands are still handing out independent contractor’s contracts to the estate agents as an employment contract.
An employment contract must guide the relationship between the estate agent (employee) and the owner of the estate agency (the employer). The law makes provision for unusual hours and situations where less control is exercised, making the matter quite simple and not as complicated as it may seem.
Traditional agents are often scared to sign an employment contract; sadly because they do not understand the protection of the employee, which is a benefit to the estate agent.
Erasmus has a few useful tips for estate agents concerning their employment contracts:
- It is important to make sure the terms and conditions are set out clearly.
- An employer cannot change the terms of the contract resulting in less favourable terms for the employee, without the consent of the employee as this action is seen as unfair dismissal.
- With an employment contract in place, the agent also secures commission that will be due to the estate agent.
- An employee contract in terms of sales consultants should also clearly state when an agent will not be entitled to earn commission on a transaction.
Principal agents should be careful not to change these terms, which may include the territory of operation of the estate agent. On the other hand, estate agents are employed to generate sales and, where no sales are produced, the contract should stipulate at what point the employer can terminate the employee’s agreement, she says.
Linda Erasmus completed an LLB degree in 2014, after having spent almost 30 years employing and training estate agents.
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