Expected Piece Rate Changes A Major Win For Backpackers

31st January, 2022 
Key Takeaway

All workers on a piece rate agreement will soon be paid no less than the national minimum wage (according to an initial decision by the FWO). This aims to protect workers from exploitation, whilst still incentivises increased productivity for more pay.

Key Points:
  • Piece rate is a pay rate for the amount picked, packed, pruned or made.
  • The intent of the piece rate system was to incentivise workers to pick, pack, prune and make more, and thus earn more.
    Example:
    Day 1 Julie picks 1000 oranges and earns $100.
    Day 2 Julie picks 1500 oranges and earns $150.
  • Pacific Islanders and Working Holiday Makers [backpackers] make up a significant proportion of the Australian harvest workforce who are paid using the piece rate system.
  • The problem with the piece rate system is it enables deceptive employers to underpay their workers and is very difficult to police. This has led to the infamous exploitation problem known amongst backpackers in Australia.
    Example of unfair piece rate: Julie worked as hard as she could and picked oranges for 7 hours but received only $35 for the day (There can be a number of reasons why she was only awarded $35 in this example, but the important point is that it can be legally justified and is very difficult to investigate).
  • A national minimum wage for any piece rate agreement has since been introduced.
    Example: Julie picked for 7 hours and might be entitled to ~$177.87 at a minimum with the ability to earn more depending on the agreement and how much she picked.
  • As mentioned above, you can still earn more than minimum wage with a piece rate agreement, and thus the incentive to work harder remains.
  • This change should significantly reduce worker exploitation and begin to restore trust between the horticulture industry and backpackers in Australia.

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