Piecework takes a different approach to most other working models. Instead of remunerating employees on the basis of working hours, remuneration is dependent on the actual work performed. The basis for calculating piecework wages is always an objective criterion. However, working time still plays a role in piecework, albeit a subordinate one.
How piecework works
Piecework can be equally useful for employers and employees. The work processes can be designed in a process-oriented way for piecework. The work is generally always the same and quick to learn. This creates a continuous flow of work with its own pace.
The employees can decide on their own work flow and pace. This also gives them the opportunity to influence their salary themselves through good performance. Those who work faster while maintaining the same quality earn more. Those who prefer a stress-free job to a high salary take their time and earn less in return.
Objective criteria are needed above all to determine the piecework wage. It must be clear and comprehensible how much work has been done.
For this reason, piecework wages usually depend on one of the following factors:
- Number of units produced
- Length of a manufactured piece
- Weight of a manufactured piece
- Volume of a manufactured piece
Piecework based on the number of pieces or the quantity of a piece or product produced is most common.
An agreed piecework wage is paid for each piece produced. The content results from the total pieces produced.
However, working hours and, above all, the Working Hours Act (ArbZG) also play a role here.
What does working time have to do with piecework wages?
There are two different models for piecework wages: monetary piecework and time piecework. Working time plays a decisive role in the remuneration of the time chord.
Time chord
The time chord is based on a wage, which is usually calculated per hour of work. The system behind this is that employers set a target time in which a task must be completed in order to receive the full hourly wage. If the processing takes longer, the salary is reduced. If the task is completed more quickly, employees in turn receive more pay.
As a minimum, employees receive a basic wage that may not be below the statutory minimum wage. This is where working hours come into play, as the minimum wage is calculated on the basis of the hourly wage – i.e. one hour’s work. The current minimum wage is 12.00 euros per hour (as of 2023). The basic wage must therefore never fall below this.
An example: An employee is given one hour to assemble a car part. The piecework rate for this hour is 15.00 euros. If the employee manages to assemble the car part within one hour, she receives the 15.00 euros. If she manages it in half an hour, the piecework rate rises to 17.00 euros. If she needs half an hour longer or more, the piecework wage falls to the basic wage of 13.00 euros set by the company.
Money chord
The money chord is subject to strict legal requirements, as it is difficult to guarantee the minimum wage. In the case of Geldakkord, no basic wage is set, but simply the service itself is remunerated.
This means that working time plays a different role in the monetary piecework: it must be possible to achieve a piecework wage that corresponds to the statutory minimum wage within one hour.
The money chord can therefore only be used for certain tasks that always require the same process and can always be completed in the same amount of time. This is not possible, for example, if external factors can influence the work. If a machine is needed for the work or a colleague has to do preparatory work, Geldakkord does not work, as no remuneration is provided for the waiting time.
Suppose a wooden furniture manufacturer grinds off a chair leg. A monetary chord is set for this. There is 0.50 euros per sanded chair leg. In order to reach the minimum wage of currently 12.00 euros (as of 2023), 24 chair legs would have to be sanded per hour. This results in 2.5 minutes working time per chair leg.
If an employee creates more than 24 chair legs per hour, the piecework rate increases. The problem, however, is that piecework wages fall below the minimum wage if they are less than the 24 chair legs per working hour. Then piecework is questionable in terms of the law.
The provisions of the Working Hours Act for rest breaks and shift times also apply to piecework. This poses another problem with the money chord, because if you take a break, you can’t keep the hourly chord.
Conclusion
Piecework can be a sensible working model if the tasks qualify for it. However, it is important to ensure compliance with the minimum wage laws, which are linked to working hours.
The Working Hours Act also specifies a number of regulations that can have an impact on piecework. For example, prescribed breaks must be taken into account when calculating piecework wages.
The setting of the piecework wage is based on a fair approach, which assumes that the minimum wage is achievable without succumbing to overcharging. This requires a certain amount of intuition and good calculations. Piecework is therefore only advisable if the tasks in the company provide the basis for it.
Although time recording is not necessary for piecework, it is helpful for determining how much time a task takes. Pieceworkers must also adhere to shift times and break times. Recording working hours helps to maintain an overview.
