Caretaker remuneration can affect the body corporate’s budget, the services residents receive and the relationship with the resident manager. The lawful process depends on the management rights agreement, the applicable regulation module and whether a statutory review is available.
This guide outlines the main ways remuneration may be reviewed or changed, and what committees and lot owners should check before approving a proposal.
How can caretaker remuneration be changed in Queensland?
A resident manager or caretaker is generally engaged as a service provider rather than as an employee of the body corporate. A management rights arrangement is typically a contract for services that sets out the caretaker’s duties, powers and remuneration. The Body Corporate and Community Management Act 1997 governs body corporate managers, service contractors and related engagements.
The remuneration may be expressed as a dollar amount per lot each year. This can make costs easier to compare, but it does not necessarily reflect the work actually required.
The possible pathways include:
- agreement between the body corporate and the caretaker
- a remuneration review under the caretaking agreement
- a statutory review of eligible service-contract terms
- dispute resolution about a contractual matter.
These pathways are not interchangeable. Check the individual agreement and the scheme’s regulation module before deciding which process applies.
The Queensland Government describes service contractors as people engaged to perform specific duties that help a body corporate meet its legal obligations. It also recognises that an existing engagement may be amended, transferred or terminated.
What does a caretaking agreement say about remuneration reviews?
Start by reading the entire agreement, including any schedules that describe the caretaking duties. A remuneration review may be available under the agreement itself, but the process will depend on the wording negotiated for that scheme.
Agreements differ. A review clause may specify:
- who can initiate the review
- when a review can be started
- how remuneration is to be calculated
- what happens if the parties cannot agree
- whether an expert is appointed
- who pays the expert’s costs
- the steps and timeframes for completing the review.
Some agreements may link remuneration to a market assessment or another calculation method. Others may provide a negotiation process without prescribing a particular outcome.
Follow the review clause carefully. A party should not assume that a market review gives it an automatic right to increase or reduce remuneration. The clause may require evidence, negotiation or an expert process before a change can be made.
The Act recognises service-contract terms dealing with a service contractor’s functions and remuneration.
If the review clause is unclear, obtain advice before starting the process. A disagreement about the meaning or operation of the agreement may become a contractual dispute.
When can the body corporate negotiate a remuneration change?
The parties can negotiate a change where the agreement allows it and both parties are willing to proceed.
The resident manager should agree to the proposed change, and the parties should sign written documentation recording the new remuneration. The document should also identify any related changes to the caretaker’s duties, service levels, timing or other management rights terms.
The required body corporate approval depends on the applicable legislation, regulation module and agreement. The Act allows regulation modules to prescribe requirements for service-contractor engagements, including requirements about their terms, extension and renewal.
Check the motion wording and required resolution before putting the proposal to owners. For example, a body corporate manager’s written engagement must state the payment arrangements. The Queensland Government says the body corporate must approve that engagement at a general meeting where there is a committee.
A practical negotiation may include:
- a time-and-motion report or other independent assessment of the work involved
- a review of whether the duties accurately describe the work and frequency required
- proposed service levels and reporting arrangements
- any other management rights terms the parties want to negotiate at the same time
- clear reasons for the proposed increase or decrease.
A time-and-motion report can reduce subjectivity, but it is not automatically a legal requirement. Confirm who commissions and pays for it before the report is prepared.
A mutually agreed proposal is more likely to receive approval than an unsupported request for an increase. This is practical negotiation guidance, not a statutory test.
You can also review the responsibilities discussed in our guide to caretakers and maintenance responsibilities.
When can statutory service-contract review rights apply?
The Act includes statutory review provisions for some service contracts. These provisions help the parties decide whether the relevant terms are currently fair and reasonable and, if they are not, how they should be changed. The review may concern the caretaker’s functions and powers or the remuneration payable to the service contractor.
These provisions can apply where the service contract was entered into during the original owner control period and the statutory eligibility requirements are met. Check the particular contract and current legislation to confirm whether this pathway is available.
The statutory process does not provide a general right to reopen every management rights agreement. It is separate from a contractual market review. The agreement may provide a review mechanism even where the statutory pathway is unavailable.
A statutory review may require independent written advice from an appropriate person about whether the reviewable terms are fair and reasonable. The body corporate’s final decision about the review outcome must be made by ordinary resolution.
If the parties cannot resolve a dispute arising from the review, either party may apply for an order from a specialist adjudicator or QCAT under the available statutory pathway.
What time limits and eligibility rules should you check?
A statutory review must be started and completed within the applicable review period. Check the current legislation and the contract carefully because the eligibility requirements and timing interact.
The service contract must also meet the statutory conditions, including the requirements about when it was entered into and whether the term of engagement has ended. The body corporate may request a review only after authorising that request by ordinary resolution. A contract can be reviewed under the statutory division only once.
Building age alone does not determine eligibility. Consider the contract dates, the end of original owner control, the term remaining and the wording of the agreement.
The review criteria include whether the terms create a fair and reasonable balance, whether conditions are unnecessarily difficult, whether consequences are unfairly harsh and whether the terms suit the nature and characteristics of the scheme.
If there is a dispute about the engagement of a caretaker or service contractor, the Act provides pathways involving specialist adjudication or QCAT, depending on the dispute and the applicable process.
What should the body corporate do before approving a change?
Before owners vote on a remuneration change, the committee and body corporate should:
- Locate the signed management rights agreement and all variations.
- Confirm the applicable regulation module.
- Identify the current duties, service levels and remuneration.
- Check whether a contractual review clause applies.
- Check whether the statutory review provisions may apply.
- Obtain supporting information about the work and proposed remuneration.
- Confirm the required resolution and meeting process.
- Record the agreed change in a properly signed document.
- Update the duties if the work or frequency is changing.
- Keep the report, motion, resolution and signed variation with the body corporate records.
The current code of conduct applies to caretaking service contractors when they perform obligations under their engagement. It is treated as part of the contract and prevails if there is an inconsistency with another contract term.
A committee should avoid presenting a remuneration proposal as a simple approval of an increase. Owners should receive enough information to understand the current duties, the proposed change, the evidence supporting it and any effect on the body corporate budget.
For further information about dispute pathways, see Commissioner’s Office caretaker disputes and disputes with building managers: options for Queensland body corporates.
The right process for changing caretaker remuneration depends on the agreement, regulation module and required body corporate approval, so check each before proceeding. If your committee needs help reviewing the process, contact our team at reception@stratacare.com.au.
