Piece rate

Piece work (or piecework) is any type of employment in which a worker is paid a fixed piece rate for each unit produced or action performed regardless of time.

When paying a worker, employers can use various methods and combinations of tactics. Some of the most prevalent methods are: paid a wage by the hour (known as "time work"); paid an annual salary; salary plus commission (common in sales jobs); base salary or hourly wages plus gratuities (common in service industries); salary plus a possible bonus (used for some managerial or executive positions); salary plus stock options (used for some executives and in start-ups and some high tech firms); salary pool systems; (also known as "profit sharing"); paid by the piece – the number of things they make, or tasks they complete (known as ‘output work’); or paid in other ways (known as ‘unmeasured work’).

Some industries where piece rate pay jobs are common are agricultural work, cable installation, call centers, writing, editing, translation, truck driving, data entry, carpet cleaning, craftwork and manufacturing. Working for a piece rate does not mean that employers are exempt from paying minimum wage or overtime requirements, which vary among nations and states.

Employers may find it in their interest to use piece rate pay after examining three theoretical considerations; the cost and viability of monitoring output in a way that accurately measures production so that quality doesn’t decrease is first. Variable skill level is second, where piece rates are more effective in a more homogenous workforce. Thirdly, there may be more invasive managerial relations as the management is attempting to test how fast the workers can produce

Employees decide whether to work for piece rate pay if the relative earnings are high, and if other physical and psychological conditions are favorable. Some of these might be job stress, physicality, risks, degree of supervision and ability to work with peers or family members. Employees may also be more or less welcoming to performance pay depending on the leverage and risk. Leverage was defined as ratio of variable pay to base pay, and risk is the probability the employee will see increased benefits with effort. Workers tended to be suspicious of pay packages that were too heavy on variable pay and were concerned it might be a concession to remove cost-of living wage adjustments or to secure wage rollbacks.

Under UK law, piece workers must be paid in either at least the minimum wage for every hour worked or on the basis of a ‘fair rate’ for each task or piece of work they do. Output work can only be used in limited situations when the employer doesn’t know which hours the worker does (e.g. some home workers). If an employer sets the working hours and the workers have to clock in and out, this counts as time work, not as output work.

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