Division 5 of Part III of the Employment Act (Chapter 373) permits payment by output rather than by time. It is a narrow permission, hedged with conditions, and the conditions are frequently overlooked on plantations and smallholder blocks.
Section 28 — the two definitions
“Piece-rate work” means work of an agricultural or horticultural nature declared by the Minister by notice in the National Gazette to be work to which this Division applies.
“Unit of work” means the unit agreed on as being the basis for payment of an employee employed under a contract for piece-rate work.
Two limits are built into the definition of piece-rate work, and both must be satisfied:
- the work must be agricultural or horticultural in nature; and
- it must have been declared by gazettal.
An employer who employs an employee under a piece-rate contract unless the work has been declared under section 28 is guilty of an offence. Penalty: a fine not exceeding K300.00.
So “per bag”, “per tonne” or “per row” arrangements in undeclared work — and in any non-agricultural work, such as construction, cleaning or security — are not piece-rate contracts under Division 5 at all. Whatever the parties call them, they fall to be treated as oral or written contracts under the ordinary Divisions, with the ordinary hours, minimum wage and notice rules.
Section 30 — how the contract is made
| Made | Requirement |
|---|---|
| Orally | Section 15 applies — the employer must make a written record of the terms at engagement, and without it the employee’s statement of the terms is conclusive |
| In writing | No force or effect until the employee has (i) signed or affixed his mark, and (ii) certified that the terms have been read by or to him and that he understands them |
Note the phrase “read by or to him”. Division 5 accommodates an employee who cannot read without requiring attestation by a labour officer — but the certification must be genuine.
Section 30(3) to (5) — contracting with a group
(a) between an employer and an employee; or
(b) between an employer and a group of employees engaged to carry out the piece-rate work jointly.
- Section 30(4) — a group shall designate one of their own number to be the representative for the group.
- Section 30(5) — the contract confers on each member of the group the same rights and liabilities in relation to the employer as it does to the group jointly.
Section 30(5) is important. A member of the group is not merely part of a collective bargain; each has individual rights against the employer under the same contract. And the group representative is chosen by the group — not appointed by the employer.
Section 12 provides that a contract of service is not binding on the members of the family of an employee — but it says so “subject to Section 30”. A family group that has itself been engaged jointly under section 30(3)(b) is bound as a group. Family members who were not part of that engagement are not.
Section 30(6) — the rate must be notified in advance
The rates to be paid per unit of work shall be notified by the employer to each piece-rate employee prior to the commencement of the employment.
“Each” employee, and before work starts. A rate announced at the end of the harvest, or varied part-way through without agreement, does not comply. Read this with the section 14 duty to disclose the total wage and deductions.
Section 31 — the Piece-rate Register
- (1) The employer shall keep a Piece-rate Register as prescribed.
- (2) A piece-rate employee and a labour officer may at all reasonable times inspect the Register kept in relation to that employee.
- (3) Failing to keep the Register, or refusing inspection, is an offence. Penalty: a fine not exceeding K100.00.
The right of inspection belongs to the worker as well as the inspector. It is the only practical way to check that units recorded match units worked, and it should be exercised regularly rather than only when a dispute arises. See also records an employer must keep.
Section 32 — the scales must be verified
Where a measuring instrument is used by an employer to measure a unit of work, it shall be an instrument stamped and verified in accordance with the Trade Measurement Act (Chapter 286).
Where pay depends on weight or volume, the accuracy of the scale is the accuracy of the wage. A worker is entitled to see the stamp on the instrument, and to raise an unstamped or unverified scale with a labour officer.
Termination and other rules
Under section 35(3), a piece-rate contract under Division 5 may be terminated by either party without notice. That is the trade-off for output-based pay. The other protections of the Act still apply: the rules on deductions, the method of payment, the health, housing and ration provisions, and the limits on employing young persons.
Sources
- Employment Act (Chapter 373) — ss 12, 14, 15, 28–32, 35; Part III Division 5
- Trade Measurement Act (Chapter 286)
- Mamugoba v New Britain Palm Oil Ltd [2024] PGNC 419; N11082
Before relying on anything here, read the current text of the Employment Act (Chapter 373) and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.