Chapter 3 - Labour Payment Methods

Question 1

When would the Time Rate payment method most likely be used ?

Answer 1

Time rate payment method is used where the quality of the work done by the employee is more important than the volume of their work.

(E.g luxury chair shop would rather have 1 amazing chair than two alright ones)

Question 2

When would the Piecework Rate payment method most likely be used ?

Answer 2

Piecework Rate payment method is used where the quantity of work done by the employee is more important than the quality.

(Most of the time this will be repetitive work)

Question 3

When would the Bonus System payment method most likely be used ?

Answer 3

Bonus Systems are usually used to motivate employees where the work harder, produce better quality outputs

Question 4

What would the Gross Pay Calculation be for an employer using the Time Rate payment method ?

Answer 4

Hours Worked x Rate Per Hour = Basic Pay

Question 5

What would the Gross Pay Calculation be for an employer using the Piecework Rate payment method ?

Answer 5

Number Of Items Produced x Rate Per Item

Question 6

What problem can occur with the Time Rate payment method ?

Hint - Motivation

Answer 6

Pay is directly linked to time worked and not to output or quality of work, this may lead to employees not working to their full potential.

Slower workers may be paid overtime or higher rates

Question 7

If a business is heavily focused on the **output **of their employees what may be the best labour payment method for them ?

Answer 7

Piecework Rate as pay is directly related to output