Last month, the Fair Work Ombudsman (FWO) launched unprecedented legal action in the Federal Court against a large mushroom farm that paid hundreds of its employees based on how much they picked at a rate of 60 to 80 cents per kilogram. It is alleged that the employees had been exploited and underpaid almost $650,000 in eight months.
A piecework rate is payable where an employee gets paid per piece of work completed. This means the employee gets paid a certain amount for each item picked, packed, pruned or made. When an employee receives a piecework rate, this is paid instead of an hourly rate of pay.
The Fair Work Act 2009 (Cth) provides limited circumstances where an employee can be paid piecework rates. These include where:
An award that does provide for piecework rates is the Horticulture Award 2010 and this was applicable to the mushroom farm employees.
Under the Award, an employee can be paid piecework rates; however, the employee must on average earn at least 15% more per hour than the minimum hourly rate prescribed under the Award for the applicable classification. There is also a requirement that if the employee is a casual, they receive the casual loading in addition to the piece work rate. The piecework arrangement must be in writing and be a genuine agreement. Time and wages records must be kept by the employer.
This case will be a test for the FW Act with respect to piecework rates and may impact not only on the Horticulture sector but also the Textiles, Clothing and Footwear industries that also utilise piecework rates.
Employers are reminded that if an employee is entitled to receive piece work rates and are paid accordingly, the employee must receive at least what they would have received had they been paid in accordance with the relevant industrial instrument.
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