Many employees in the horticulture industry are paid on a piece rate basis, which means that their pay is determined by the amount of produce harvested. The Horticulture Award establishes minimum pay rates, and other entitlements, but until last month, this Award did not require employees to be paid a minimum daily wage. Due to changes to the Award, pieceworkers are now guaranteed a minimum wage.
AWU – Call for Change
The Australian Workers’ Union (AWU) filed an application with the Fair Work Commission in December 2020, seeking to amend the Horticulture Award 2020, to include a minimum wage guarantee. After numerous submissions from interested parties, the application was heard in July 2021.
According to the AWU’s submissions to the Commission, there was evidence of widespread violations of the piece rate provisions, such as setting rates too low (which violated the Horticulture Award).
The AWU also submitted:
- Many workers on piece rates were paid less than the minimum wage;
- The exploitation of migrant workers, who were sometimes unaware of their rights, was common with piece rates; and
- The piece rate provisions, in the Award, were complicated and unworkable, making it difficult to calculate wages.
The submissions, listed above, show problems with the current piece rate system’s implementation, rather than the system itself.
The Opposing View
Opponents of the changes, including the Australian Fresh Produce Alliance (AFPA) and the National Farmers’ Federation (NFF), argued that:
- The alleged non-compliance, and abuse of the piece rates, was exaggerated;
- Steps had recently been taken to address non-compliance, such as regulating labour hire companies operating in the industry;
- The industry’s uniqueness meant that the piecework rates were appropriate, particularly where produce needed to be harvested within a short timeframe and could spoil; and
- If the changes are implemented, primary producers will face increased financial pressure.
Variation of the Award
Despite industry opposition, the Commission decided to make changes to the Award in accordance with the AWU’s application, including a minimum wage floor, and associated time recording provisions.
The changes continue to allow high-performing workers to be incentivised by the piece rate, while also attempting to ensure that workers earn at least the minimum wage.
An employee covered by the Horticulture Award may be paid:
- An hourly rate;
- Piece rates; or
- Both hourly and piece rates.
Employees who are paid on a piece rate, whether full-time, part-time, or casual, now have a minimum wage guarantee.
The worker must be paid at least the ‘hourly rate for the pieceworker’ multiplied by the number of hours worked on that day for each day that he or she works. The applicable hourly rate is specified in the Award. Casual employees are subject to a 25% casual loading.
If a pieceworker earns more than the minimum wage guarantee for a day’s work under the piece rate, they must be paid the difference.
Things to consider:
Because of the changes, producers who use piece rates may need to rethink their hiring, supervision, performance, and termination procedures. This should be done while keeping the Award and other Fair Work Act provisions in mind.
The Award was also changed to make the record-keeping requirements more stringent. Piecework records replaced the previous ‘piecework agreements’ under the Award, as of 28 April 2022. Piecework records must include the following information:
- The start date and time for the piecework;
- A description of the task or tasks for which the piece rate will be paid;
- The piece rate amount;
- The hourly rate for the pieceworker’s classification level (including the 25% loading for casual pieceworkers); and
- A prescribed statement about the pay rate guarantee.
The Horticulture Showcase provides information and resources, including record keeping templates, to assist employers and workers in the industry.
If you have any questions and require assistance regarding the changes to the Award, please do not hesitate to contact our Employment or Agribusiness lawyers on (08) 9322 1966 or email email@example.com.