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The EC of our building has voted to award substantial gratuity payments to several long-standing members of the committee to recognise their work. Motions are to go to an AGM in due course. Regardless of how deserving people on committees may be for giving their time, are there no rules on such payments? In Queensland I have been told that EC members can be awarded no more than $300/year in compensation. Is a gratuity payment a way round this?
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It's not a way round it but these payments can only be made retrospectively. If owners don't believe the recipients deserve the payments they can always vote against them or amend the amounts to be paid. I'm not aware of any limit and I would expect any potential recipient to absent themselves from the vote as a courtesy to other owners.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
This was the closest discussion I could find on this topic and rather than start a new discussion decided to add to this existing one.
We are having extreme difficulty getting owners to go on our executive committee (EC). It has been proposed that members of the EC be given a discount on their levys. What are peoples thoughts on this?
We are aware of:
“STRATA SCHEMES MANAGEMENT ACT 1996 – SECT 25
Can members of the executive committee be paid?
25 Can members of the executive committee be paid?
An owners corporation may pay to a person who is the chairperson, secretary, treasurer or a member of the executive committee such amount as the owners corporation determines at an annual general meeting in recognition of services performed by the person for the owners corporation in the period since the last annual general meeting.“
The above legislation would indicate that payments can only be made retrospectively. However we are considering passing a bylaw such that EC members get to pay the agreed levy minus say 10%. Would the bylaw be legal? or how can it be done otherwise?
One way we discussed was, at the AGM passing a motion saying that,
” members of last years EC were to receive payment equal to !0% of next years levys. Payment to be made by EC members paying each quarterly levy minus 10%.”
This way we are making sure payment (by way of reduction in future levys) is only made after an EC member has served the period for which they are being ‘paid’.
Cosmo – It’s a bit of a fiddle, but I don’t see a problem with Executive Committee Members being elected at an AGM, and on the basis of simple majority vote by those so entitled it’s then resolved to make agreed payment/s to those Members at the end of each subsequent quarter, perhaps so that those align with the dates for making Levy Contribution Payments; that would meet the requirements of Sect 25.
Any discount on Levy Contribution Payments would in my opinion be harder to manage, as its limited to 10% under Sect 79, requires a vote by ≥75% of those so entitled on a unit entitlement basis (i.e. a poll vote), and would require each benefiting E/C Member to always make their payment in advance of the Due Date – where that can become messy; for example around the date that payments are made and when they’re received.
My personal position on payments to EC members (13 years not out in my case) and office bearers (five years in the chair) is to resist it on the grounds that it could be taken as creating a master/servant relationship — which some people see as existing anyway, but that’s another story. If I had been asked to nominate a gift on stepping down, I would have said a black cartridge for my printer and a ream or two of A4 to make up partly for my unheralded donations to the affairs of the scheme, but I was happy, and touched, to receive a gift card. No-one should be out of pocket as a result of contributing to the protection of perhaps the biggest single component of their personal wealth, but on the other hand they should not be looking to enrich themselves.
There are a number of issues with that, mostly outlined by Whale. The other thing is if you offer a discount on levies to the EC members, then you will have to adjust your budget accordingly, i.e. raise the levies payable to take account of the discount, so that you are levying the amount in the budget.
I spoke to our strata manager a while ago on a related matter, where a payment to an EC member was due (reimbursement) and he advised that they couldn’t do a book entry across to the levies owed by that person. That may have been due to our accounting system. However, I think it is cleaner to just give them the money, and then they can do what they like with it.
One thing you need to consider – if EC members are being “paid”, that can raise liability issues, as there are different considerations for actions in a paid and unpaid capacity, so you need to check with your insurer.
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