The Fair Work Commission (FWC) has released its final determination on amendments to the piece work arrangements under the Horticulture Award, including announcing the implementation date for the amendments being 28 April 2022.
The FWC has chosen 28 April 2022, to allow employers time to prepare for the implementation of these significant changes, including potential changes to payroll systems, recruitment practices and supervision arrangements.
From 28 April 2022, there will be a mandatory minimum wage guarantee for piece workers, irrespective of actual productivity.
This is a significant change to the way the Award has operated historically and has the potential to increase costs for employers. Historically, employees working on piece rates were remunerated based on their productivity, and it was possible for some employees to earn less than the Award hourly rate if their productivity was low. Similarly, it was possible for productive employees to earn a rate far above that provided for in the Award for the number of hours worked.
The ability to earn more than the Award rate remains and highly productive employees working on piecework rates will continue to be able to maximise their income.
From 28 April 2022, where an employee’s productivity is such that on a piecework rate they would earn less than they would if paid the Award hourly rate for the same time, their remuneration must be increased to the minimum Award rate. For example, an employee who worked for 6 hours under a piece rate agreement would be guaranteed a minimum payment of 6 hours at the relevant Award hourly rate, irrespective of their productivity.
Historically, employers have not had to directly manage less productive employees, as the piecework rate ensured that the remuneration was commensurate with the employee’s individual productivity. These amendments mean that it will no longer be commercially viable for employers to allow employees to work at a rate which would result in productivity less than the equivalent hourly rate. The impact will be a substantive performance management obligation on employers and a lack of opportunity for those employees who knowingly chose to work at their own pace for a lesser remuneration. This may well impact the attractiveness of the Horticultural Industry as an employer for some groups of prospective employees such as backpackers who worked in the industry for reasons other than just the remuneration, for example, to experience rural and remote places and/or to meet Visa requirements. It will also undoubtedly impact negatively on prospective employees with physical limitations which may prevent them from working at a productivity rate equivalent to the minimum Award hourly rate. Recruitment strategies should be reviewed to ensure that only employees who are able to work at the required pace to meet the minimum productivity obligations commensurate with the rate of pay are engaged.
Employers will need to reconfigure their payroll systems to ensure that employees working on piecework rates earn the minimum Award hourly rate for the actual hours worked, irrespective of the amount they would have received based on productivity. This in itself will be a significant change as historically most if not all piecework rate employees have not kept timesheets, as the time worked was not relevant to the calculation of their remuneration. Importantly, the Horticulture Award did not require such employees to complete timesheets. Employers will now be obliged to ensure that such employees keep accurate time records to ensure they are paid accurately.
The FWC in its decision also put Employers who have an Enterprise Bargaining Agreement on notice that once the amendments are implemented and there is a base rate of pay for all employees, section 206 of the Fair Work Act, 2009 will operate to require that Employees covered by an Agreement are remunerated at a rate equivalent to, at least, the base rate of pay in the Award. This is not a consideration under the Award currently as there is no base rate of pay for employees working on piecework rates. This changes from 28 April 2022. Therefore, all employers covered by the Award should use the time between now and the implementation date to review recruitment, performance management and payroll processes.
We can assist in preparing your business for the implementation of the new piece rate processes. Please contact your usual Mazars advisor or our HR Consulting division on email@example.com, 07 3218 3919 or via the form below:
Author: Cheryl-Anne Laird
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