Piece rate is a payment system in which employees are compensated based on the number of units they produce or tasks they complete, rather than receiving an hourly wage or fixed salary. Under this system, a fixed rate is assigned to each item or task, and workers earn more by increasing their productivity. This method is commonly used in industries such as agriculture, manufacturing, and textiles, where output can be easily measured.
Piece rate pay can incentivize efficiency and high performance, but it may also lead to inconsistent income and potential quality concerns if speed is prioritized over workmanship. Legal minimum wage requirements still apply.