A number of industries across New Zealand, particularly agriculture, use piece rates to pay employees for the work completed. Piece rates refer to employees being paid per piece worked on, for example the amount of fruit picked or number of clothes sewn.
Employees being paid piece rates cannot be disadvantaged and are entitled to the appropriate minimum wage. For employers, this means regardless of how many pieces of fruit an employee is expected to pick if they don’t pick enough to cover $17.70 an hour (current base adult minimum wage as of April 2019) then they must still be paid $17.70.
An employee being paid piece rates is still entitled to the same minimum entitlements as any other employee. In the case of dismissal, this means the employee must be afforded the same fair process but there is an added layer of complexity with piece rates as there is a clearer picture when an employee is under-performing.
For example, an employee paid per bucket of fruit will be noticeably under-performing if they are not filling enough buckets of fruit. In this case, the employee may be dismissed following a fair process based on poor performance and a production rate slower than expected.
Paying employees on piece rates is done in the same manner as any other employee. For employers, this means, on a weekly, fortnightly or monthly timeframe depending on what is specified in the employment agreement.
Piece rates are an appropriate payment method for many industries, and employers can use this type of pay to motivate employees and ensure required level of productivity. However, failing to provide minimum wage to employee on piece rates is a simple mistake which can lead to action from the Employment Relations Authority.
For advice, employers should contact Employsure on 0800 675 697.