Minimum wage for different types of work
Paid per task or piece of work done
Workers paid per task they perform or piece of work they do (known as piece work) are classed as doing ‘output work’.
They must be paid either:
- at least the minimum wage for every hour worked
- a ‘fair rate’ for each task or piece of work they do
Output work can usually only be used in limited situations when the employer does not know which hours the worker does (such as with some home workers).
The work is not classed as output work if the employer sets either:
- a minimum or maximum time the worker must work
- the start and finish times for a period of work
If the employer sets the times of work this counts as ‘time work’.
Fair rate
The fair rate is the amount that must be paid for each piece of work, to make sure someone working at an average speed is paid at least the minimum wage per hour.
There is a way to work out the fair rate per piece of work done which employers must follow.
Work out the average rate of work per hour
Employers must carry out a fair test to find out how many tasks or pieces an average worker completes in an hour (the average rate of work).
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Test some or all of the workers. The group you test must be typical of the whole workforce - not just the most efficient or fastest ones.
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Work out how many pieces of work have been completed in a normal working hour.
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Divide this by the number of workers to work out the average rate.
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If the work changes significantly, do another test to work out the new average rate. It’s not necessary to do another test if the same work is being done in a different environment, for example work previously done in a factory being done at home.
Work out the fair rate
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Divide the average rate of work by 1.2 (this means new workers will not be disadvantaged if they’re not as fast as the others yet).
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Divide the hourly minimum wage rate by that number to work out the fair rate for each piece of work completed.
Example
On a farm, workers are paid for each kilogram of strawberries they pick. On average a worker can pick 24 kilograms of fruit an hour. This number is divided by 1.2 to make 20.
Although the farm is open from 9am to 6pm each day, workers can choose the hours they work within these times.
Andy works on the farm. He is eligible for the National Living Wage rate of £12.21.
To meet the minimum wage he is paid 62p for each kilogram of strawberries he picks (£12.21 divided by 20, rounded up to the nearest pence).
He will be paid depending on how many kilograms he actually picks, not by how long he spends on the farm each day.
If an agricultural worker was employed before 2013 or is in Wales, they may be entitled to the Agricultural Minimum Wage. There are also different rules and rates for agricultural workers in Scotland and Northern Ireland.
Give notice of fair rate
To use a fair rate an employer must give each worker a written notice before they start work for the first time.
The notice must:
- say that the worker will be paid for producing a piece of work or completing a task, for example picking a certain amount of fruit
- say that to calculate whether minimum wage is being paid it’s assumed the task will take an average time to complete
- confirm if the average time to complete the task has been tested or is an estimate
- say how many tasks or pieces of work it’s assumed someone can complete in an hour
- give the amount to be paid for each piece that the worker completes
- include the Acas (Advisory, Conciliation and Arbitration Service) helpline number for employees to get advice
If employers do not give a worker a complete notice then the worker is entitled to be paid by the hour instead.