Farms will be required to pay fruit pickers a minimum wage after the Fair Work Commission found the industry's piecework arrangements not fit for purpose.
The Australian Workers' Union labelled the decision to implement a minimum casual pay floor, currently at $25.41 an hour, a victory for underpaid and exploited farm workers.
The commission rejected industry arguments that putting a floor on the piecework model where pay depends on the amount of produce harvested would disincentivise more productive workers.
"The existing pieceworker provisions in the Horticulture Award are not fit for purpose; they do not provide a fair and relevant minimum safety net as required," the commission said in its decision.
It amended the award to set a minimum floor for piecework pay arrangements and require employers to keep records of pickers' hours to ensure monitoring and enforcement.
The commission found widespread non-compliance with the award and a majority temporary migrant workforce vulnerable to exploitation.
It said piecework rates were usually presented on a "take it or leave it" basis rather than being the product of genuine negotiation with the worker.
There was often no written pay agreement.
Acknowledging some pieceworkers earned more than the average "target rate", the commission found the overall situation to be one of significant underpayment compared with the minimum award rate.
"It is inherently unlikely that introducing a minimum wage floor will 'disincentivise' pieceworkers currently earning more than the minimum award rate," it said.
"Introducing a minimum wage floor will provide an incentive to reduce the current cohort of unproductive workers, thus increasing productivity."
The AWU labelled the industrial decision one of the most significant in modern times following concerns some farm workers were paid as little as $3 an hour.
"Fruit pickers in Australia have been routinely and systemically exploited and underpaid," national secretary Daniel Walton said.
"Too many farmers have been able to manipulate the piece-rate system to establish pay and conditions far beneath Australian standards."
While doing farm work in Australia, British backpacker Sophie Blake was paid about 15 cents per tree for pruning and cleaning up afterwards.
She thinks the minimum wage decision will attract more backpackers to farms as Australia's international border starts to reopen and help reduce turnover.
"(The decision is) completely life-changing for the next generation of backpackers," she told AAP.
Labor said the decision meant exploitation of farm workers should become a thing of the past.
"This is a huge win for workers, the union movement and regional communities," opposition spokesman Tony Burke said.
"It's also a win for those employers who do the right thing but have had to compete with dodgy operators who don't."
The National Farmers' Federation, one of the industry bodies against the minimum pay push, labelled the ruling a blow to wage costs that threatened to make the most productive workers unaffordable.
"It is a bitter blow to many farmers who are already doing the right thing, but who are right now facing another harvest with a woefully inadequate workforce," chief executive Tony Mahar said.
"Farmers want to ensure workers are paid fairly and they also want to be able to reward their most productive workers."