The new piecerate floor – will you benefit?

Every now and again there is a major change in employment law that impacts everyone involved.  The new piecework minimum wage is one such change.

Why have piecerates existed?

Piecework payments have been an integral part of the wages system for horticulture for a long time. There have been benefits for productive workers as well as employers.

Employees who are efficient and productive can get rewarded with wages better than the hourly rate they would otherwise earn. The fastest, most experienced workers in some industries can, and do, earn much more than wages.  Even those who are just better than average regularly earn more than their hourly-paid counterparts.  Some farms even have difficulty enticing their pieceworkers picking fruit into the packing sheds where hourly pay is the norm, because earnings can be so much better in the field.

The downside of piecerates is that staff who are not working to the level of an average competent worker earn less than hourly wages.  For someone just starting out, still learning and gaining efficiency, and even becoming work-hardened, earnings can be quite low during this period.

Induction training lacking

This had led to complacency from some farm employers who have shown little interest in providing a good induction and training in techniques to new workers.  This is because the cost of production per unit is the same whether that worker is fast or slow.  Some have seen no benefit investing time in training to improve the work capacity of their workforce, so many new workers end up teaching themselves as they go – not an ideal way to learn.

A major downside of this is that new workers who do not advance quickly become frustrated with low earnings and lose patience.  They often then leave that employment with a bitter taste and have negative attitudes to this type of work.  This can be to the detriment of the industry as a whole, especially if the disgruntled former employee vents those feelings on social media for all to see.

Dodgy employers spoil it for everyone

The legitimacy of this wages regime has relied upon the piecerate offered being realistic and fair. The existing Horticulture Award has stated how piecerates are to be paid, but has never prescribed how they are to be calculated. With so many variables amongst the myriad of farms, different fruit and vegetables picked and conditions under which the work is done, it is unsurprising farms and their labour hire contractors use many different calculation methods.

This has also meant that inexperienced workers considering a piecework job have no idea whether a piecerate offered by a farm employer is a fair and realistic one.  There is no reference guide that indicates whether a rate is legal or not. 

This has resulted in certain employers taking advantage of the grey area and offering piecework rates that are neither fair nor honest. And while every industry has its fair share of shonky operators, piecework has provided those in the horticulture sector, with that mindset, the opportunity to line their pockets with money rightfully belonging to their workers. The negative publicity generated by stories of victims has done reputational damage to farmers Australia-wide, and no doubt discouraged some people considering farm work.

Successful campaign for change

A campaign to highlight examples of workers receiving very low wages under piecework conditions has been under way for some time. Although greater scrutiny of some of the claims may have been warranted, it was clear there were sufficient genuine examples of exploitation to attract the attention of authorities.

This has resulted in a decision by the Fair Work Commission to modify rules applying to piecework.  The main change is that workers will soon be entitled to the minimum wage that applies to them, regardless of their productivity.  Hours of work will also need to be recorded by their employer.

It is not clear that there will be any greater investigation or compliance action taken against the rotten apples who have flouted labour laws that have led to this change.  Those farms or contractors that implicitly defraud workers of their rightful wages under the current rules, are unlikely to change under the new ones.  So anyone considering piecework under the new rules will need to ensure their employer is one of the majority who comply with the law and pay fairly.  If they do not, a worker should immediately consider moving to a different farm or contractor, and use the Fair Work dob-in line to report that employer.

New rules a double-edged sword

It is important to note that piecework will remain a legitimate means of paying for work under the Horticulture Award.  This will be a relief for productive workers who earn good money under this arrangement.  However, some farms will no doubt respond to the change by giving up on piecework altogether and switch to a totally hourly rate.  Good workers may wish to negotiate with their employer if changes are being considered, and no doubt some will opt to leave a farm with an hourly-only rate and move to an employer who still offers piecework.

There will be a big challenge for workers with low productivity who, to date, may have been quite satisfied with less than hourly-paid earnings.  Grey nomads with reduced capacity happy to top up a pension, stay-at-home parents pleased to get out of the house while kids are at school, and workers with limited work capacity, may find pressure to increase their work-rate.  Under the current regime the cost of production for the employer is the same for a slow worker as for a fast one, but when the minimum rate comes in, a slow worker will become expensive for the farm.  This is likely to lead to them being replaced if they cannot improve their pace. 

Unfortunately, the ultimate result will be some slow workers who cannot improve their speed sufficiently may become unemployable in the horticulture sector.  Switching to an hourly-paid role may be an option, but if productivity is still low, a slow worker is unlikely to keep that job either.

Implementation date

Implementation of the new rules come into effect on 28 April 2022.  There has been an existing requirement to have a written agreement before commencing piecework and this remains.  The form the employer uses may look a little different, but it must be clear what the details of the piecerate arrangements are, before starting that task. 

The employer now also has an obligation to keep a record of working hours, so it is likely a system of recording will be in place where there may not have been one previously.  Each farm is likely to have a different way of doing this, and workers are encouraged to keep track of their own hours as well.  The Fair Work Ombudsman offers a phone app called Record My Hours to do exactly this.

The most important change of course is that regardless of how much fruit or vegetables picked under a piecerate arrangement, come the end of every week after 28 April, every worker must be paid at least the minimum hourly rate that applies to them. And for casual workers, who dominate seasonal work in the horticulture sector, this means including the 25% per hour loading.

Patience during the transition

So while some patience may need to be applied when enquiring with farm employers during this period of substantial change for them, from 28 April they will need to pay the minimum rate regardless.  Employees should check their payslips to ensure their employer has fulfilled their obligations.  And slow workers will need to put an effort to reach a productivity level equivalent to the minimum wage to ensure their farm employment remains as secure as it can be under seasonal conditions. While the change coming may be a double-edged sword, those that are aware and ready will be well positioned to take advantage of the new protection for pieceworkers, and the opportunities it may bring.