Wages and salaries
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WAGES AND SALARIES. WAGES AND SALARIES It is important that employees are properly rewarded for the work they do. PAYMENT SCHEMES There are a number of methods which can be used to reward employees for the work they do. Annual salaries Time Rates Piece Rates Commission Fees

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WAGES AND SALARIES

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WAGES AND SALARIES

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WAGES AND SALARIES

It is important that employees are properly rewarded for the work they do.

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  • PAYMENT SCHEMES

  • There are a number of methods which can be used to reward employees for the work they do.

  • Annual salaries

  • Time Rates

  • Piece Rates

  • Commission

  • Fees

  • Fringe Benefits

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  • ANNUAL SALARIES

  • Fixed amount agreed per year

  • Hours and conditions of work laid out in Contract of Employment

  • Suitable method for permanentfull time staff

  • Suitable for professional, management positions

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TIME RATES

Paid hourly rate, eg £5.00 per hour

Standard working week, eg, 35 hours per week

Basic pay calculated £5 x 35 hours = £175

Hours worked in excess of standard pay is OVERTIME

Overtime may be at time and a half or double time.

Double time = £10; Time and a half = £7.50 per hour

Gives guaranteed income for employees

Used where quality of work is more important than time taken

Suitable for service sector workers

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  • PIECE RATES

  • Pay is linked to output

  • Agreed rate for every item produced eg £1 per garment completed

  • Used as an incentive, the more a worker produces the more they will earn

  • Workers usually given target to meet

  • Can result in low wages

  • Need for quality control to ensure goods made are of a standard

  • Used in manufacturing industries

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  • COMMISSION

  • Used in sales, eg insurance, telesales etc

  • Some or all of employees’ earnings are based on the amount of sales they make eg, 10% commission paid on monthly sales total of £10,000 = commission of £1,000

  • Used as an incentive to workhard and as a reward

  • Wages can fluctuate greatly from month to month depending on sales

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  • FEES

  • Payment for ‘one’off’ tasks

  • Tasks geared towards needs of clients

  • Amount paid will depend on time taken and difficulty of task

  • Examples

  • Solicitors

  • Performers

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  • FRINGE BENEFITS

  • Payments otherthanwages or salaries

  • Often made to executive, management and professionals

  • Some benefits are subject to tax

  • Have grown in importance, gives status to people

    Examples

  • Private medical insurance

  • Company car

  • Free transport

  • Subsidised meals

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DEDUCTIONS

No matter which method of payment is used to calculate GROSS PAY, deductions are then made to give NET PAY (take home pay)

GROSS PAY less DEDUCTIONS = NET PAY

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