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Remuneration

VIEWS: 16 PAGES: 16

  • pg 1
									  Methods of
Remuneration

(How we reward
     staff)
        What you will learn:
•   Time rate
•   Piece rate
•   Commission
•   Bonus
•   Full-time versus part-time work
•   Permanent/Freelance/temporary work
•   Fringe benefits
Remuneration: How Employees are
      Rewarded at Work

Decisions:
• Full time or Part time?
• Permanent contract or Temporary contract
• Pay Piece Rate or Time Rate
• Offer Bonus or Commission
• Fringe Benefits
   Full-Time and Part-Time
          Contracts
Full-time:

More than 15 hours a week

Part-time:

Less than 15 hours a week
   Permanent and Temporary
          Contracts
Permanent Contract:

No end date to the contract

Temporary Contract:

A finish date is stated on the contract. eg 6 months
   Time Rate and Piece Rate
Time Rate:

Employees are paid for each hour they work.
eg £5 per hour

Piece Rate:

Employees are paid based on how many products
  they produce. eg £3 for every product produced
     Commission and Bonus
Commission:

Employee receives a reward for every sale made. eg
  5% of every sale or £2 for every sale

Bonus:

Employee receives a set amount in recognition of
  their hard work. eg a bonus of £60 at Xmas.
          Fringe Benefits
Other benefits provided by the firm:
Company car                Staff uniform
Subsidised meals           Staff discounts
Health insurance           Pension scheme
Child care facilities      Staff parties
                           Gym membership
   Full-Time and Part-Time
          Contracts
Full-time:

More than 15 hours a week

Part-time:

Less than 15 hours a week
       Full-Time and Part-Time
              Contracts
          Advantages and        Advantages and
          Disadvantages for the Disadvantages for the
          business              employee
Full      • staff more committed      • paid more than part time
Time      • may need worker for all   • may not want to work long
          those hours                 hours
          •May be costly
Part      • only employ the person    • wage will be lower than a full
Time      for the hours you need      time post
          (reduces wage costs)        • more flexibility as to the
          • employee may not be as    hours you work
          motivated
   Permanent and Temporary
          Contracts
Permanent Contract:

No end date to the contract

Temporary Contract:

A finish date is stated on the contract
    Permanent and Temporary
           Contracts
            Advantages and           Advantages and
            Disadvantages for        Disadvantages for the
            the business             employee

Permanent   • reduces need to keep   • Job security. Entitled to
Contract    re-employing staff       redundancy pay if made
            • may appoint someone    redundant
            who is poor              • Less flexibility
Temporary   • Gives business more    • More flexibility
Contract    flexibility, reduces     • No long term job security –
            redundancy costs         less likely to get a mortgage
            • Employees less
            motivated
     Commission and Bonus
Commission:

Employee receives a reward for every sale made. eg
  5% of every sale or £2 for every sale

Bonus:

Employee receives a set amount in recognition of
  their hard work.
        Commission and Bonus
             Advantages and            Advantages and
             Disadvantages for         Disadvantages for the
             the business              employee

             • Staff more motivated    • Increases wage each week
Commission   • Encourages more sales   • De-motivated if don’t sell any
             • Increases business      products
             costs
             • Encourages workers to   • Reward for hard work
             work harder               • De-motivated if don’t receive
Bonus
             • Increases business      bonus
             costs
             Exam Question
Cheryl has just opened a bakery in Brighouse. She has
   two temporary staff – one manager and one
   baker. She is considering changing her methods
   of remuneration.

1. Using the information provided, explain the
   difference between time rate and piece rate.
                                           4 marks
2. Cheryl is thinking of offering permanent contracts
   to her staff. Analyse whether or not this is a
   good idea.
                                           8 marks
Why offer a permanent contract?
•   Effect on motivation
•   Effect on quality of work
•   Effect on labour turnover
•   Effect on sales and profit
•   Effect on costs
•   Effect on redundancy payments if she
    needed to reduce her workforce

								
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