Payment methods

  • Created by: EReynolds
  • Created on: 14-06-15 11:33


Remuneration refers to the way a worker is paid. Each type of payment system impacts on the business by motivating workers to be more efficient. There are also problems with each system.

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Piece rates

Piece rates reward manufacturing workers for the number of items made. This can encourage speed but may be at the expense of quality and accuracy.

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Time rates

Time rates are paid an amount per period of time worked. The most common are weekly or monthly wages, or annual salaries. Workers who are paid a wage can normally earn overtime for extra time completed.

Those on salary have their annual amount divided by 12 months and recieve this regardless of hours worked. Time rates can lead to workers working more slowly, but perhaps more accurately.

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Commision is a reward paid for increased sales. It is usually set as a percentage of all sales made above a base amount. This encourages salespeople to sell, but may lead to customer dissatisfaction if too much pressure is used. It can also lead to low (sometimes no) wages for those salespeople who do not exceed the base target.

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Employing for flexibility

Business need to employ a mixture of staff so that they have flexibility. They may employ full-time staff for positions where this is necessary and part-time staff for positions.

They may also employ freelancers or other outside specialists to bring special skills to the business when needed.

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Remuneration package

Other benefits may also form part of a remuneration package. These are often called 'perks' or 'fringe benefits', as they do not form a central part of the pay package. These could include items such as pensions, company cars, canteens, staff discounts, profit sharing and annual bonus payments.

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