Answer: Different from standard hours system where wages are calculated based on work hours, piecework wage system is a type system where wages are calculated based on number of completed work units such as number of products completed on an assembly line or number of newspapers delivered to customers. It reflects the the principle of more pay for more work done.
Similar to the standard workhour system, the piecework wage system enables employees to receive overtime pay; that is to say, wages under the piecework system may include both normal-time and overtime wages. Two prerequisites must be met for overtime pay under the piecework wage system: first, the employee must have fulfilled their piecework quota, and second, the employee also must have completed work units outside of normal work hours.1 Notice by the Ministry of Labor on Printing and Distributing the Provisional Regulations on Wage Payment. Article 13.
We use a case to illustrate how to calculate piecework wages. Under the piecework wage system, employee Mr. Zhang¡¯s employment contract stipulates that his monthly piecework quota is 1,000 pieces, and the piecework unit price is RMB 2. In a particular month, Mr. Zhang completed 1,100 pieces during normal work hours, 200 pieces during weekday overtime hours, and 50 pieces during weekend days. How should Mr. Zhang’s wages for that month be calculated?
The calculation result of Mr. Zhang’s wages for that month is RMB 2,900, including RMB 2,200 (1,100 * 2) for normal work hour wage, RMB 600 (200 * 2 * 150%) for weekday overtime wage, and RMB 100 (50 * 2 * 200%) for weekend overtime wage. If Mr. Zhang only completed 800 pieces within normal work hours, then his normal work hours wage is RMB 2,000 (1,000*2). Accordingly, the number of pieces for overtime hours should be 200 pieces less (1,000-800) as the 200 pieces has been deducted from overtime production to top up the piecework quota (e.g., 1,000 pieces) for normal work hours production.
Therefore, the main factors affecting wages for piecework employees are piecework quota and piecework unit price. Article 37 of the Labor Law stipulates that employers must reasonably determine a piecework quota and piecework unit price. For how to determine whether a piecework quota and piecework unit price formulated by an employer are reasonable, please refer to Are the piecework quota and piecework unit price set by the employer reasonable?
In practice, common phenomena include employers not setting a piecework quota for their employees or setting unreasonable piecework quotas and piecework unit prices. In such cases, the common practice among courts nationwide is not to recognize the effectiveness of the piecework wage system. Instead, they apply the standard workhour system to determine whether the wages are insufficient for the work hours done, based on the local minimum hourly wage. 2Gao Ying, Meihekou Branch of China United Network Communications Co., Ltd. and other civil applications for retrial of labor disputes Civil Ruling Jilin Provincial People¡¯s High Court Civil Ruling (2021) Ji Min Shen No.3698. In this case, the court held that both parties could not prove the existence of piecework quota, so it could not be determined that both parties implemented the piecework wage system. Shenzhen Intermediate People’s Court’s Guidelines on the Trial of Labor Dispute Cases, Article 63. ¡°If the two parties agreed to implement the piecework wage system, but the existing evidence can not deduce the piecework quota for normal work hours, and if the calculated hourly wages of the employee is no less than the minimum wage standard, according to the worker¡¯s wages, work hours, and legal overtime ratios, it can be concluded that overtime wages have been included in the wages paid by the employer.¡± Liu Fei and Nantong Yide Logistics Co., Ltd. Labor Dispute Appeal, Application for Civil Ruling Jiangsu Provincial People¡¯s High Court Civil Ruling (2018) Sumin Shen No.1013. The court held that when the piecework quota could not be determined, the standard workhour system could be directly used to calculate whether the overtime wages were insufficient.
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Mr. Dong Wang has been in practice for over 20 years, specializing in business law, including employment law, commercial law, company law, and intellectual property law. Mr. Wang has earned respect and trust from his clients due to his professionalism, fidielty, and kindness.
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- 1Notice by the Ministry of Labor on Printing and Distributing the Provisional Regulations on Wage Payment. Article 13.
- 2Gao Ying, Meihekou Branch of China United Network Communications Co., Ltd. and other civil applications for retrial of labor disputes Civil Ruling Jilin Provincial People¡¯s High Court Civil Ruling (2021) Ji Min Shen No.3698. In this case, the court held that both parties could not prove the existence of piecework quota, so it could not be determined that both parties implemented the piecework wage system. Shenzhen Intermediate People’s Court’s Guidelines on the Trial of Labor Dispute Cases, Article 63. ¡°If the two parties agreed to implement the piecework wage system, but the existing evidence can not deduce the piecework quota for normal work hours, and if the calculated hourly wages of the employee is no less than the minimum wage standard, according to the worker¡¯s wages, work hours, and legal overtime ratios, it can be concluded that overtime wages have been included in the wages paid by the employer.¡± Liu Fei and Nantong Yide Logistics Co., Ltd. Labor Dispute Appeal, Application for Civil Ruling Jiangsu Provincial People¡¯s High Court Civil Ruling (2018) Sumin Shen No.1013. The court held that when the piecework quota could not be determined, the standard workhour system could be directly used to calculate whether the overtime wages were insufficient.