Horticulture Award rates explained – part 2

Horticulture Award rates explained - part 2

In part 1, I talked about workers under the Horticulture Award who are paid hourly. Here, I’ll turn the attention to piece rates. This is where the worker is paid for each piece they worked on e.g. number of crates picked, or trees pruned. We often ask growers and packers if they pay piece rate and are met with “no, it’s illegal”. Since the minimum wage floor was introduced in 2022, if you don’t record time and task adequately then you can’t pay piece rates and remain within the rules, but it’s definitely still doable. That said, you’d be game to try without good software tools to help. Read on for the award interpretation for pieceworkers.

Casual workers

As I did for hourly pay, I’ll use Level 1 adult rates as an example. Let’s consider casual workers first, as most piece workers are seasonal and/or contractors. A pieceworkers pay is calculated by number of pieces multiplied by the piece rate. But what about the minimum hourly rate?

Indeed. You need to know how many hours a pieceworker worked in a day. Then you can work out the minimum you need to pay for the day by multiplying the number of hours by the worker’s minimum required rate for the day. Next, you need to check that what they earned on piece rate is at least as much as what they would earn on the minimum hourly rate. If there is a shortfall, you need to pay a ‘top-up’.

For example, Cyril worked for 7.5 hours today. His piecework record says he will be paid $4.50 per bag of avocados he picks. It also says his minimum rate of pay is $29.33 per hour. Today he picked 46 bags, so his earned hourly rate was $4.50 x 46 = $207. The minimum wage guarantee means he must earn at least $219.98 ($29.33 x 7.5 hours = $219.98). He must receive a top-up payment of $12.98 ($219.98 – $207 = $12.98).

If Carlos had filled enough bags that his earned hourly rate was greater than $219.98 for the day, he gets the higher amount. You don’t want to be calculating this manually for every worker every day. Strap in, because there’s more!

Competent workers

The legislation states that Employers have to set a piece rate at an amount so that a pieceworker, working at the ‘average productivity of a pieceworker competent at the piecework task’, will earn at least 15% more per hour than the minimum hourly rate for the pieceworker’s classification level. So that’s $33.73 for level 1 casuals ($29.33 x 1.15 = $33.73 as the 15% calculation is done on top of the casual loading). Say what?

Firstly, what does it means to be competent at the piecework task? That is a pieceworker who has at least 76 hours’ experience performing the task. So, you’ll need to keep track of who is classed as competent.

Next you need to work out the average productivity of a pieceworker competent at the piecework task. Exhausted yet? You will be if you don’t have software that can do this for you with a few clicks. ABCgrower’s Competent Worker Analysis report will calculate all this for you. It will show you who is liable for a top up to minimum wage, and who should be earning at least 15% more, and whether they are or not.

Furthermore, you can use the report to rank workers by productivity to see where you need to take action. You can also get pretty savvy by using the information at hand to fine tune future piece rates. No wonder horticulturists think piece rate is illegal! It’s not illegal but it’s definitely complicated.

Permanent workers

The same rules apply if you pay permanent workers piece rate. They’re just not subject to the casual loading.

Mixed rates

Don’t worry, this isn’t another type of rate, but it’s worth mentioning that you can pay a mixture of piece rates and hourly rates. For example, you pay pruning by piece and training by the hour. Or you pay picking by the hour at the start of the season when the produce is sparse, and by the piece during the peak of harvest. Does it add to the complexity? Yes and no. Not when you’ve got the right tools to take care of the calculations.

At ABC Software, we have clients who only pay piece rate, others who only pay hourly, and others who do a mixture of both. By entering their records directly into ABCgrower’s website or off-line app, smart growers use their own information to find the best solution for their business.

Horticulture Award rates explained – part 1

Blueberry picking

Horticulture Award rates explained - part 1

As providers of award interpretation software, we’re often asked questions about pay calculations – and these questions often come from organisations already doing the right thing…or at least trying to do the right thing – it’s complicated! Employees of growers and packers fall under the Horticulture Award. Here, I’ll talk about work that is paid hourly.

Permanent workers

I’ll use the level 1 adult rates as an example throughout. For permanent workers – that’s full-time and part-time employees, the minimum hourly rate is $23.46. This is the rate for ordinary hours. Time and a half is $23.46 x 1.5 = $35.19, and double time is $23.46 x 2 = $46.92. So far, so good.

But how do you know when to apply which rate? First you need to record the start and finish times of your workers and calculate the hours worked. Then you need to know the rules, and apply them to your records. A laborious task which can be difficult to get right without tools to help.

When you record worker time and task in a program like ABCgrower it will do the calculations for you. For example, it will check that the ordinary hours of work for your permanent employees have not exceeded 152 hours over a four-week period. For a worker with hours in excess you assign those hours as overtime, as required by the award.

Bucket of blueberries

Allowances

What if some of your workers are entitled to a first aid or leading hand allowance? These allowances are an extra amount per hour. In ABCgrower, you simply add then to a worker’s minimum hourly rate setting, e.g. First aid allowance = $23.46 + $0.32 = $23.78, and everything will be calculated correctly from there.

Casual workers

This is where it gets trickier. Most are aware the hourly rate is $29.33 (as of 1st July 2024). This is made up of the minimum hourly rate of $23.46 plus 25% casual loading i.e. $23.46 x 1.25 = $29.33.

The ‘half’ part of time and a half, is half the base rate i.e. $23.46 x 0.5. This is added to the casual rate, so all up it’s ($23.46 x 1.25) + ($23.46 x 0.5) = $41.06. Similarly with double time, it’s ($23.46 x 1.25) + ($23.46 x 1) = $52.79.

Workers in ABCgrower are set as casual or permanent, and the rules are applied accordingly. For example, the ordinary hours of work for casual employees other than shift workers will not exceed 304 ordinary hours over an eight-week period.

Allowances are managed in the same way for casuals as they are for permanents, as the casual loading is applied to the allowances also.

Managing worker’s pay rates

Correct rates are one thing, but how do you manage the various rates of all your workers? Without the right tools, it’s getting even more complicated. ABCgrower has several ways to manage this with ease, including setting and applying pay grades. You can set up pay grades for the various award rates, and set the appropriate grade for each worker. When the rates increase, as they invariably do each year, set the new rates and they are automatically applied to the workers.

If you pay more than the minimum required rate, the system will calculate overtime rates at your rate, or at the minimum rate, as is your preference.

So, while the rules and regulations are complicated, being compliant doesn’t have to be, so long as you have the right tools. Look out for part 2 where I look at paying piece rate (spoiler alert, it is still legal!).