Piecework: A New Era of Task-Based Pay


In this article we will discuss what exactly piecework is and its potential benefits. We'll also provide some guidance on how you can assess whether piecework might be a good fit for your work situation or not.

What is piecework? (Quick answer)

Piecework is a type of pay structure in the industrial revolution where employees are paid for each job they complete or each unit produced instead of receiving wages based on working hours. piecework rates varied based on products.

Piecework is based on the idea that some tasks can be completed more quickly and efficiently with fewer workers, and employers are willing to pay more for these jobs. These workers also work faster. There is also a minimum wage in the piecework system.

What is piecework pay?

Piecework pay refers to a method of compensating employees based on the quantity of work they complete, rather than the hours they work. Instead of receiving an hourly wage, workers are paid a predetermined rate for each unit they produce or service they perform.

Here's a breakdown of the key points:

  • Focus on output: Earnings are directly tied to individual productivity.
  • Rate per unit: Workers receive a fixed rate for each completed unit (e.g., $1 per widget assembled).
  • Flexibility: Can be appealing to employees seeking greater control over their earnings potential.

It's important to note that piecework pay needs to comply with minimum wage and overtime regulations, ensuring workers are adequately compensated for their time and effort.

Piecework pay VS in kind payment


Both piecework pay and in-kind payment are alternative compensation methods to traditional hourly or salaried wages, but they differ significantly in their form and implications:

1. Form of Payment:

  • Piecework Pay: Employees receive cash based on the quantity of work they complete. The payment is tangible and readily exchangeable for goods and services.
  • In-Kind Payment: Employees receive goods or services instead of cash as payment for their work. These can be items like food, housing, or company products, or services like healthcare or educational benefits.

2. Control over Earnings:

  • Piecework Pay: Employees have direct control over their earnings. They can increase their income by working faster and producing more units.
  • In-Kind Payment: The value of in-kind payments might not always be easily convertible to cash, and employees have less control over how they fulfill their needs.

3. Legal Considerations:

  • Piecework Pay: Subject to minimum wage and overtime regulations. Employers must ensure workers are compensated fairly for their time and effort.
  • In-Kind Payment: May have specific legal limitations regarding the value and type of goods or services offered as compensation. It's crucial to comply with regulations to avoid violating labor laws.

4. Suitability:

  • Piecework Pay: Suitable for jobs with measurable output and where workers have some control over their work pace. Examples include manufacturing, assembly lines, and agricultural work.
  • In-Kind Payment: Often used in situations where cash wages are limited or in exchange for remote work in specific locations. It can also be part of a benefits package alongside traditional pay.

In essence, piecework pay offers cash based on output, while in-kind payment provides goods or services in exchange for work. Understanding these key differences is crucial for HR professionals and employers to choose the appropriate compensation method that aligns with their business needs and complies with legal regulations.

Where might piecework be not applicable?

Although piecework can be beneficial for certain types of jobs, there are situations where piecework may need to be applicable:

Skilled/Professional Jobs

Piecework pay is generally unsuitable for jobs requiring a high level of skill or expertise. Jobs like engineering or lawyering often require problem-solving, creativity, and other skills difficult to measure in piece rate pay.

Complex and Time-taking Jobs

Piecework is also inappropriate for jobs where the tasks are complex or take a long time to complete. Piece rates are based on output, so if the job takes several hours, piecework may not be the best option.

Long Tasks with Low Output

Piecework is not suitable for jobs that require a long time to complete and have low output. For example, piecework may not be suitable for a job that requires an employee to spend an hour troubleshooting and fixing a complicated machine if the outcome is only one fixed machine.

Piecework jobs can also be difficult to manage if the tasks are spread out over multiple days or weeks.

Benefits of piecework for businesses

Benefits Concept. Word on Folder Register of Card Index. Selective Focus.Piecework has several benefits for businesses, particularly if the job involves long tasks with high output.

  • Increased Productivity: Piecework encourages employees to be efficient and productive, and it eliminates the need for managers to keep track of time cards or hours worked. Piecework encourages workers to complete their tasks as quickly and accurately as possible, which can help increase productivity overall.

  • Higher Output:  Piecework can also lead to higher output, as it rewards employees for completing more tasks in a shorter time. This can help businesses get more done in a shorter amount of time, leading to increased profits.

  • Higher Worker Satisfaction: Piecework can also lead to higher satisfaction among workers, as piecework rewards them for their hard work and efficiency. Piecework also gives workers more autonomy over their work, as they can choose how to complete the tasks and be rewarded accordingly.

  • Easier Management: Piecework is less complicated and easier to manage than hourly wages. Piecework jobs don't require employees to keep track of hours or fill out paperwork, making it simpler for managers to monitor their workers.

  • Cost Savings: Piecework is generally cheaper for businesses since employers only have to pay for the output of a job rather than the hours worked. Additionally, since piecework jobs are paid on output, businesses can save money by not hiring additional employees if the work requires more manpower.

Benefits of Piecework For Employees

Piecework may also offer advantages for employees looking for a job.

  • Flexible Work Schedule: Piecework jobs may offer more flexibility in terms of hours worked since employees are not required to work a set number of hours per week. Piecework jobs may also be more flexible in terms of location since piecework can often be done remotely or from home.

  • Payment Based on PerformancePiecework jobs allow employees to control their earnings and be rewarded for their performance. Piecework encourages workers to strive for excellence, leading to higher pay over time as they become more efficient at the job.

  • No Timecard Tracking: Piecework eliminates the need for employees to track their hours and submit timecards, simplifying the process of getting paid. Piecework also means that employees are not required to work a certain number of hours each week, allowing them greater freedom in managing their time and workload.

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Potential drawbacks of piecework

  • Lower Quality: Piecework may lead to lower quality output since piecework rewards employees for completing tasks quickly rather than accurately. Piecework is also not ideal for jobs that require high levels of skill or expertise since piecework does not reward the quality of work.

  • Lower Earnings: Piecework jobs may also offer lower earnings than hourly wages, particularly if employees cannot complete tasks quickly and efficiently. Piecework also means that employers have no obligation to provide employee benefits such as health insurance or vacation days, which can reduce the overall pay.

Useful Read: What does Paid Time Off Mean? Everything Managers Need to Know


Various methods are used to compensate employees, and Piecework is one of the most common. It is a pricing system for Pay-Per-Yield (PPY) type work. It considers the varying skill levels of employees and pays them based on their production.

While piecework has many benefits, businesses should be cautious of its potential drawbacks before implementing it within their organization. We hope this article has helped you learn about piecework.

Frequently Asked Questions

  • Piecework was originally designed to incentivize workers to increase production by rewarding them for how much work they completed.

  • Piecework jobs can range from manual labor, such as manufacturing or assembly line work, to more specialized work, such as programming or data entry. Piecework jobs can be done remotely or from home as well.

  • Piecework plans typically pay employees for each unit of work they complete, such as a product manufactured or a task performed. Piecework jobs can also be paid by the hour, but employers only pay for actual hours worked and not for any idle time.

  • One key advantage of piecework payment over in-kind payment is increased employee motivation and potential for higher earnings.

    Here's a breakdown of why:

    • Direct Link to Effort: With piecework, employees see a direct correlation between the effort they put in and the reward they receive. This can be motivational, encouraging them to work harder and produce more to increase their income.

    • Greater Control: Employees have greater control over their earnings potential. By working efficiently and increasing their output, they can earn more compared to a fixed wage or salary. This sense of control can be incentivizing for some workers.

    • Market Value Representation: Piecework pay can be seen as a more accurate reflection of an employee's market value based on their productivity. This can be appealing to high performers who believe their contributions deserve higher compensation.

    It's important to note that this advantage should be considered alongside the potential drawbacks of piecework pay, such as pressure to prioritize quantity over quality and the risk of exploiting workers by not ensuring fair compensation for their efforts.

    Ultimately, the decision to implement piecework pay should be made carefully, considering the specific work environment, employee needs, and compliance with labor regulations.

Topic: HRM
Carin Vreede

Written by:

Carin Vreede

With years of experience in the HR field, Carin has a lot of experience with HR processes. As a content marketer, she translates this knowledge into engaging and informative content that helps companies optimize their HR processes and motivate and develop their employees.


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