1. WAGES AND SALARIES lc/pm1

2. 2 WAGES AND SALARIES It is important that employees are properly rewarded for the work they do. Employers’ ObjectivesEmployees’ Objectives MotivationPurchasing power Cost and profitabilityFair pay PrestigeComparison with others RecruitmentRecognition Labour Turnover Control

3. lc/pm3 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

4. lc/pm4 ANNUAL SALARIES  Fixed amount agreed per year  Hours and conditions of work laid out in Contract of Employment  Suitable method for permanent full time staff  Suitable for professional, management positions

5. lc/pm5 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

6. lc/pm6 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

7. lc/pm7 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 work hard and as a reward  Wages can fluctuate greatly from month to month depending on sales

8. lc/pm8 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

9. lc/pm9 FRINGE BENEFITS  Payments other than wages 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

10. lc/pm10 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 STATUTORY DEDUCTIONS VOLUNTARY DEDUCTIONS Income TaxUnion Dues National Insurance Pensions and Savings schemes