By Robby Magyar

In a landmark decision, the Fair Work Commission (FWC) has ruled fruit and vegetable pickers employed under the Horticulture Award 2020 as pieceworkers are entitled to a guaranteed minimum wage at the relevant rate for their award classification.

The Australian Workers Union (AWU) has labelled this “one of the most significant industrial decisions of modern times” and it’s hard not to agree, given it will see pieceworkers receive at least $25.41 per hour of work performed, even if their piece-rate (based on the number of fruits or vegetables they harvest) doesn’t reach that minimum.

In reaching this decision, the FWC stated that the previous piecework arrangements “do not provide a fair and relevant minimum safety net” as is required under s 134 of the Fair Work Act 2009 (Cth), which leaves workers, many of whom come from migrant backgrounds, vulnerable to rampant exploitation.

The piecework rates under clause 15.2 of the award were previously required to provide workers with the potential to earn 15 per cent higher than the equivalent minimum hourly rate, subject to an agreement made between employer and employee “without coercion or duress” to safeguard against non-compliance.

Unfortunately, these rates have been consistently “set and varied unilaterally by the grower and offered to employees on a take it or leave it basis” and any such safeguard have ultimately been held to be “illusory”. And in some cases, employees have been paid “as little as $3 an hour” according to AWU National Secretary Daniel Walton.

In opposition to the introduction of a minimum wage for pickers, the Australian Fresh Produce Alliance (AFPA) claimed that it will “eviscerate the piecework-based safety net by throwing out the risk-reward bargain”. Employers argued that it would “demotivate and disincentivise” workers, increase costs and reduce productivity.

These contentions were disregarded by the FWC on the basis that employees generally bear the risks associated with piece rates with limited instances of reward. It considered that a minimum wage would act as an incentive to increase productivity among the workforce, while employers would still have a legitimate process to terminate poor performing employees.

It’s also hoped the minimum rate will reduce the potential exploitation of migrant workers. This has been a major point of concern for the FWC of late as they may not have the same level of support or community connections to understand if they’re being ripped off. Leaving them fearful of visa cancellations when they do seek to contest workplace issues.

The FWC has prepared a draft variation to the Horticulture Award which reflects this guaranteed minimum rate, inviting any interested parties to comment on the form of the new clause before it’s inserted. As such, currently, we don’t have a date for when these changes will take effect, but we expect that it will be sometime in early 2022. Employers should take steps to prepare themselves and their payroll systems to comply with this new obligation.

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Robby Magyar is a Workplace Relations Consultant at FCB and HR Assured who relishes the opportunity to assist businesses in the best practice approach to managing employees and compliance concerns. He has a particular interest in making employment law and human resources digestible for our clients.