Piecework pay is common in trades, agriculture, manufacturing, and construction — but it is one of the least-supported pay types in Canadian payroll software. Here is how it works, what the CRA requires, and how to handle it correctly.
What is piecework pay?
Piecework is a pay arrangement where an employee is paid per unit produced, per task completed, or per job done rather than by the hour or on a fixed salary. Examples include:
- Farm workers paid per bin of produce harvested
- Garment workers paid per piece assembled
- Delivery drivers paid per route or per parcel
- Construction workers paid per unit installed
Piecework is legal in all Canadian provinces. However, most provinces require that piecework earnings must average at least minimum wage over the pay period. If a piecework employee earns less than minimum wage for their hours worked, you are required to top up.
How the CRA treats piecework for deduction purposes
For CPP, EI, and income tax purposes, the CRA treats piecework pay the same as any other employment income. You calculate deductions based on total gross earnings for the pay period, exactly as you would for an hourly employee. The pay type does not change the deduction formula.
The key thing to get right is gross pay. Gross pay is units completed multiplied by the rate per unit, plus any additional earnings like vacation pay. Once you have gross pay, the CRA deduction formulas apply normally.
Pay stubs for piecework employees
Pay stubs for piecework employees should clearly show the unit rate and units completed so the employee can verify their gross pay. A description like "Harvest Pay @ $2.85/bin x 220 bins" makes the calculation transparent and reduces disputes.
All required pay stub information still applies: gross pay, all deductions itemized, net pay, and year-to-date totals.
Why most payroll software does not support piecework
Most Canadian payroll platforms are built around hourly and salaried employees. Piecework requires the system to accept a unit count and rate rather than hours and a wage rate. PayCub supports piecework natively — you enter the unit count on each pay run and PayCub calculates gross pay and all CRA deductions automatically.
Vacation pay on piecework earnings
Piecework employees accrue vacation pay on their earnings just like any other employee. The minimum rate is 4% in most provinces (6% after five years of service). You can pay vacation pay as a percentage on each cheque or accrue it and pay it out when the employee takes vacation. Both methods are supported in PayCub.