Piece rates & commission payments
Some employees can be paid piece rates or commission payments.
Employees paid piece rates and commission payments are paid by results instead of getting an hourly or weekly pay rate. This means the amount the employee earns each week will vary depending on how much work they do.
A piece rate is where an employee gets paid by the piece. This means the employee gets a pay rate for the amount picked, packed, pruned or made.
When piece rates are paid, they apply instead of the hourly or weekly pay rate. An employee can be hired to work a mix of piece rates and hourly rate shifts.
When can an employee be paid piece rates?
An employee can be paid piece rates when:
- an award or registered agreement allows for piece rate payments
- the employee isn’t covered by an award or registered agreement and they get a pay rate based on how much work they do.
There has to be a written and signed piecework agreement setting out the pay rate per piece and how it is measured. An employer has to keep the agreement as part of their records and give a copy to the employee.
If the agreement is varied, it must be agreed to in writing by the employee and employer.
An award or registered agreement can have additional requirements or specific rules about piecework. Find out more information about piecework arrangements in your award by selecting from the list below.
Find enterprise agreements and other registered agreements on the Fair Work Commission website.
Award and agreement free employees can be paid piece rates. They must still receive at least the national minimum wage. Go to Award and agreement free wages and conditions for more information.
A commission payment is an amount paid to an employee based on how much they sell.
Normally, the commission payment is calculated as a fee or percentage of the employee’s total sales. A commission payment can be called a ‘bonus’ or ‘incentive payment’.
A commission payment can:
- be paid as an extra incentive on top of an employee’s pay or
- make up an employee’s whole wage (commission only payments).
When can an employee be paid commission as an incentive?
An employee can be paid commission as an incentive at any time.
An award or registered agreement can set out rules about how this can be done.
When can an employee be paid commission only?
An employee can be paid on a commission only basis when an award, enterprise agreement or other registered agreement states an employee can be paid this way.
For rules about paying award and agreement free employees on a commission only basis see Award and agreement free wages and conditions.
An award or registered agreement can set out specific rules about how the commission can be paid.
Find information about piecework arrangements and commission payments in your award by selecting from the list below.
Based on what you've told us, it looks like you're covered by the Vehicle Repair, Services and Retail Award [MA000089].
An employee can't be paid pieceworker rates under the Vehicle Award
A vehicle salesperson and their employer can negotiate commission payments. Any commission payments are paid on top of the minimum hourly rates and penalties in the award.
An employer can use commission payments instead of paying for additional hours beyond 38 hours per week. Employers need to make sure the commission is more than the payment the employee would've received for working the additional hours.
Employers need to check that their employee has earned enough commission payments to cover any additional hours at least once every 3 months. If the commission payments aren't enough to cover all of the additional hours, the employer needs to pay the difference within 21 days of the last day of the previous month.
Any commission payment arrangements need to be in writing and include the basis on which commission will be paid. The employer has to keep a copy of the agreement, and give a copy to the employee within 21 days of their start date.
Each month, an employee has to be:
- told the particulars of the vehicles delivered
- told what commission was earned during the month
- paid commission or any balance of the commission that is owing.
This has to be done within 21 days of the last day of the month.
Changing commission payment arrangements
The commission arrangement can be changed if:
- the employer and employee agree to it in writing, or
- the employer gives 1 weeks notice in writing.
When commission payments are due
Commission accumulates when the vehicle is delivered to the customer.
When the vehicle sale involves 2 or more salespersons, they have to agree on how the commission will be divided between them.
If an employee resigns or is dismissed:
- before the vehicle they sold is delivered, they will get paid 2/3 of the commission if it’s delivered within 3 months of the date their employment ends
- after the vehicle is delivered but before the commission is paid, they will get paid the commission within 14 days of date their employment ends.
For hourly pay rates in this award, check Minimum wages.
To find out more about who this award applies to, go to the Vehicle Award summary.
Source reference: Vehicle Repair, Services and Retail Award [MA000089] clause 28.4 and 28.5
- Building, construction and on-site trades
- Contract cleaning services
- Don't know
- Hair and beauty
- Health support services
- Real estate
- Road Transport
- Social, community, disability and home care services
- Storage services and wholesale
Think a mistake might have been made?
Mistakes can happen. The best way to fix them usually starts with talking.
Check out our Help resolving workplace issues section for practical advice on:
- figuring out if a mistake has been made
- talking to your employer or employee about fixing it
- getting help from us if you can't resolve it.
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