Payment for committee members
04 Apr 2016
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In corporate parlance you can have executive and independent non-executive committee members. The difference is ownership. Executives have a large(ish) stake in the company and independent non-executives do not.
In strataland every voting committee member is an executive member but the time is coming where we will have independent non-executive committee members. That was a question on the last discussion paper, but we are probably a little way away from that yet.
With that will come costs, but also independence and a degree of qualified corporate governance.
One of the big things with the BCCM Act is the encouragement of self governance. While a body corporate must have an AGM every year, there is no requirement for even a single committee meeting. How each committee runs itself is up to it.
Of course, if you don’t meet as a committee in a year the committee responsibilities are a little less intense than if you are on a committee that meets monthly with a full agenda.
We are seeing more and more committee members start to take a little more than the honorarium allowed by the Modules for their services. There is nothing wrong with that. Ultimately, there aren’t too many people who willingly work for free, as much as such saints do exist.
But there are rules around this.
The statutory minimum
The Modules are very clear on automatic entitlements for costs as a committee member. What you can claim without approval of owners at general meeting is reimbursement of expenses of not more than $50 incurred in attending a committee meeting provided that would not result in you being reimbursed more than $300 in a 12 month period.
Of course, you should ensure that the reimbursements are properly documented and minuted. Expenses are expenses – they are monies outlaid. It is not time taken.
How you otherwise need approval
The first rule is that the committee cannot authorise payments outside the minimums set out in the Modules. It needs to occur at general meeting by ordinary resolution.
The Modules require disclosure to owners in general meeting of:-
- the full amount of the remuneration, allowances or expenses (including an explanatory schedule); and
- if the payment relates to expenses—the reason the expenses were incurred.
If you don’t follow those rules you cannot be paid anything more than the $50 / $300 in 12 month cap. If you do follow the rules, what you ask to get paid is up to you.
Can you be paid for services rendered?
In theory yes, but those services would have to be outside those you provide as a committee member. If you are a lawyer (heaven forbid) and you are on a committee which needs legal advice, your firm could be engaged for that advice. But that would be independent of your role as a committee member. Load the invoice at your ethical peril. You also wouldn’t be able to vote in engaging your firm.
What about tax?
We are not accountants. But the payments are surely personal services income (PSI) meaning that they cannot be structured as payments to be made in gross by the body corporate. That means the body corporate needs to register as an employer and deal with all of the issues that come with that. Superannuation, PAYG tax, reporting and so on.
Definitely go and get your own tax advice!
So that’s all good. You are putting in the effort and being remunerated for that. Happy days.
One of the things that comes with remuneration is responsibility. In a body corporate context that is threefold for us:-
Work health and safety
Remember Julia Gillard? Four prime ministers ago and counting?
A national work health and safety regime was her baby. We first wrote about this in 2011 here. One of the big things with that from a volunteer perspective is that there is statutory protection from personal liability for breaches of the WHSA. If you are not a volunteer (i.e. you are getting remunerated) you can be prosecuted personally for breaches of the WHSA by your body corporate.
It also means the body corporate comes within the realms of the WHSA by having an employee (you).
The time is coming where a body corporate is going to be prosecuted under this legislation. Don’t let it be you or yours.
Protection under the BCCMA
Committee members are protected from personal liability under the BCCMA for acts made in good faith and without negligence. The back up for that is officeholder insurance.
Whether the respective plaintiff litigation and insurance industries treat a volunteer committee member the same as one who got paid $30,000 for a part time job in terms of accountability is something that may also get interesting.
Performing for owners
If non paid owners or committee members are in effect paying you to govern the body corporate, you would want to make sure that you are meeting the higher expectations than that which would apply to a volunteer. If not, you might find that come AGM time you might lose your position to someone not asking for remuneration or reimbursement.