1. Unit 19

2.  Understand the impact on staff of various payment strategies, including time, piece rate, commission, full time versus part-time, freelance or temporary work and fringe benefits  Understand the impact of different payment systems on the business

3.  To be able to list the different payment strategies  To explain what are ‘fringe benefits’ and give appropriate examples  To be able to explain how pay may affect motivation at work  To understand the impact of different payment systems on business.

5.  There are different ways of paying employees, a business may use a mixture of these methods, depending on how many employees it has.  Time based systems  Salary based systems  Results bases systems  Temporary and freelance systems  Other forms of payment.

6.  Manual workers or blue collar workers who tend to do manual work.  Manual workers tend to be paid wages on a time based system, they are paid so much per hour worked.  If they work longer than their agreed hours they gat paid overtime, this is normally paid at a higher rate. 1.25 or 1.5 times their basic rate  The pay is shown as Gross Pay + Overtime

7.  Non-manual or white collar workers are normally paid a salary.  Salaries tend to be paid monthly rather than weekly.  Salaried workers are paid for doing a particular job.  Overtime is not usually paid to salaried workers, they are expected to work as long as it takes to do their job.

8.  Some workers are paid according to how much they produce.  Workers on a piece rate system get paid for the number of items that they produce, the more they produce the more they get paid.  Sales staff may be paid a commission for every sale that they achieve, some solely on commission, so no sales = no pay.  Others may be paid a bonus, given as a reward for doing well or achieving specific targets.  There may also be ‘group’ bonuses paid to departments.

9.  Some workers are part-time and not full- time.  This means that they are not employed for the full working week, as a result they will get paid a percentage of the full time wage, depending on the hours they work.  Temporary workers are workers employed on a temporary basis, for example at Christmas or to cover emergencies  # continued

10.  Freelance workers, consultants, (usually self employed) are workers paid by a business to perform a certain and specific task.  IT consultants and a lot of workers in the building industry are freelance – Building firms like to employ them as it keeps the costs down.  If there is no work then the freelance worker is not needed, so don’t need to be paid.

11. Workers can be paid in other ways then money:-  Fringe Benefits are ‘payment in kind’, over and above their salary.  They may include a subsidised pension scheme, free or subsidised healthcare, a company car, retail businesses also give their employees discount – eg ASDA  Fringe benefits are often paid to avoid paying more tax and used to motivate workers.

12.  The payment system used varies from business to business and there are a number of factors that affect the choice:-  What is possible?  The payment system used depends on what is possible, businesses may find it difficult to pay a piece rate to the managers, equally paying cleaners on a commission basis may not work  # Continued

13.  Part-time and full-time workers may expect different payments and salaries and different benefits.  It may also not be possible to employ the right person without the right range of ‘fringe benefits’

14.  Tradition  In many workplaces the payment system is very similar to the one used 15 or 20myears ago!  This is because workers worry that if the payment system is changed then they will nit earn as much,  This may be especially true if a piece rate is replaced as the faster workers will get less money, they may resist the change.

15.  Tax and other employment costs.  Some payment systems are used because they reduce the tax payments for both the employee and employer.  Costs can also be reduced by using freelance workers

16.  Payment systems can be used to motivate workers.  Piece rates can encourage workers to work hard.  The same can be said of bonuses and commissions that are paid for meeting targets.  These motivators can also be de-motivators, piece rate may have lots of work but lots of faults, not making a target can be de- motivating,

20.  Complete the review questions for unit 19

21.  Complete the homework task for unit 19.