METHOD OF WAGES PAYMENT

SUBMITTED BY -
TISHA
FACULTY OF MANAGEMENT
ST.JHON’S COLLEGE,AGRA
mail id -
Tishakapoor1010@gmail.com

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 WHAT IS WAGE PAYMENT SYSTEM

 It is the way of giving financial compensation

to the workers for the time and effort
invested by them in converting material into
finished product.

 This method adopted by manufacturing

industry to remunerate workers.
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 IMPORTANCE

 Facilities the preparation of wage plan for

future
 Determine the cost of production and the
profitability.
 Determines the earning their living
standards

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 CHARACTERISTICS

 Fair and justifiable to both.

 Helps in maximizing workers ’s satisfaction
and minimizing labour turnover.
 Assure minimum guaranteed wages all
workers.
 Provide more wages to efficient and skilled
worker.
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 TIME BASED SYSTEMS
 Halsey Plan
This plan was first designed by F A Halsey of Rand Deill Co, Canada. Under this plan a standard time is
fixed for completing a work in advance. A person taking standard or more is paid for the time taken by
him. A worker completing his task in less than the standard time is paid for some of the time saved.
The payments for time saved varies from 33% to 66.2/3% but generally wages for one half of time
saved are paid
Example Time allowed for a task : 20 Hours
Actual Time taken : 15 Hours
Hourly rate of pay : Rs. 1.50
Calculate the Wages of the workers.

𝑆−𝑇
Solution. 𝑇𝑋𝑅 + XR S= Standard time allowed
2
T= time taken R= Hourly Rate
20−15
15𝑋1.50 + X1.50
2
=22.50+(2.5x1.50) = 22.50+3.75= Rs. 26.25
In this equation, a worker gets Rs. 3.75 as incentive for saving 5 hours.

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 MERITS OF HALSEY PLAN
1. It guarantees minimum wages to all workers, whether efficient or inefficient
2. Efficient workers are induced to show better results by offering them additional
wages
3. The employer also gains under this system because workers are not paid for full
time saved by them.
4. This method is very simple Workers can make their calculations very easily.
5. There is no need to over speed because incentive is not for more productions
but for time saved.
Demerits of Halsey Plan
1. The Workers are not given full reward to their efforts. Normally they are paid for
half of the time saved and not for full time.
2. It may be difficult to fix standard time for completing a job.
3. The quality of goods suffers because workers try to complete the work in
shortest possible time.

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3. Labour cost per unit is reduced because time saved is shared by the worker and
management
4. The Increase in Production will reduce overhead cost per unit.

Demerits of Rowan Plan

1. The calculation of bonus under this system is complicated. In Halsey plan workers
know that they will get additional wages for half of the time saved. In this method a
certain Wages Payment and Incentive Methods.
Proportion of time saved bearing to standard and actual time is paid as
incentive. The calculation involved is difficult for workers to understand.
2. This method is unjust to efficient workers because bonus is paid at decreasing rate.

3. Labour cost is generally higher in this method.

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ROWAN PLAN

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EMERSION PLAN
Emerson, an associate of F.W. Taylor, developed this efficiency plan in 1910. A standard
output is fixed for determining the efficiency of worker. A worker reaching up to
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66 % 𝑜𝑓 efficiency is paid only minimum wages and bonus is paid only when his
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efficiency crosses this limit. The rate of bonus increases with the increase in efficiency.
For example, 1000 units are fixed as a standard production, a person producing 1000
units achieves 100% efficiency, another person producing 800 units reaches 80%
efficiency and so on.
Under this plan bonus is 20% of wages earned at 100% efficiency and increases by
1% with every percent increase in efficiency. If efficiency is 110% then bonus will be
30% at this level Efficiency of Workers is well acknowledged in this system.

Merits of Emerson Plan

1. It is simple and easily understood by workers.
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2. Workers get security because minimum wages are paid if efficiency is upto66 3 %

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3. It provides stimulus to workers for increasing their efficiency. The rate of bonus
increases progressively.
4. It Provides incentive even to beginners and less efficient persons.

Demerits of Emerson Plan

1. Standards may be set Fairly high and workers may not be above to achieve
them.
2. Workers may not be encouraged to increase their output beyond the standard
level because benefits may be nominal.
3. The records of standards will have to be kept separately for different categories
of workers. It increase clerical work.

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 BEDEAUX PLAN
This plan was devised by Charles E Bedeaux in 1911. It seeks to provide
comparable standard for all workers. The benefit of time saved goes both to the
worker and his supervisor in the ratio ¾ and 1/4th respectively. A supervisor also
helps a workers in saving his time so he is also give some benefit in this method.
The standard time for each job is determined in term of minutes which are
called benders Points or B’s represents one minute through time and motion study.
A worker is paid to wages up to standard B’s or 100% performance. Bonus is paid
when actual performance exceed standard performance in terms of B’s.
Merits of Bedeaux Plan
1. It ensures minimum wages to workers
2. This method is very simple and is easily understood.
3. The supervisor is motivated to co-operate with the workers for uncreasing his
efficiency
Demerits of Bedeaux Plan
1. Workers are tempted to hurry up with the job and strict supervision will be
necessary for maintaining proper quality of products.
2. Workers resent sharing of their efforts with supervisors.
3. The standard task may be too difficult to perform with in a specified time.

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 TIME RATE SYSTEM

Wages are calculated in this method as follow.

Wages = T X R
Where T stands for Time spent and R is the Rate of pay.

Example
A Wages rate of Rs. 15 per days is fixed in a factory. Two Worker A & B attend work
for Rs. 20 and Rs. 25 days. Calculate wages for A & B
Calculation of wages for worker A
Wages = 20 x Rs.15
= Rs. 300.00

Calculation of wages for worker B

Wages = 25 x Rs. 15
= Rs. 375.00

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 PIECE RATE SYSTEM

 Labours can get the wages on the basic of their work done.
No time element will be used for calculation of wages.

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 ADVANTAGES

 Direct relation between effort and reward.

 Management can distinguish between efficient and
inefficient workers.
 Increase in productivity results in Higher output and lower
costs of production per unit.

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 DISADVANTAGE

 Difficulty to fix piece wages rates.

 The system may create jealousy between efficient and
inefficient workers.
 Clerical work is increased.
 Earning of workers are not stable and they may suffer
temporary delays or difficulties.

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 SUITABILITY

 Work can be measured accurately ,e.g., Production of

standardized goods in the factory.
 Repetitive jobs.
 Quality and workmanship are not very important.

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 PIECE RATE SYSTEM

 Wages are calculated in this method as follows.

Wages = Output x Piece Rate

Example
A wages rate of RS 10 per piece has fixed in a
factory . The output for worker A and B are 40 and 45
pieces respectively calculate for worker A & B
Calculation of wages for worker A
Wages for worker A = 40 x RS 10 = RS 400
Calculation of Wages for worker B
Wages for worker B = 45 x RS 10 = RS 450
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 WORK STUDY

 Work Study is a systematic Examination of

activities in order to improve the effective use
of human and other material resource

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 CHALLENGES OF WAGES

Skills-Based
Pay

Employee Wages
Participatio Reviews
n
Wages

Pay
Comparable Secrecy
Worth

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 INCENTIVE WAGE SYSTEMS

 An Incentive Wage System or Plan system or plan is used to

encourage workers for raising their performance. They are induced to
work more by offering them higher wages. Incentive plans are a
combination of time and piece-rate systems. In most of the plans,
workers were guaranteed minimum wages for time spent pluse extra
wages for showing better results. The incentive may be for increasing
production beyond a certain level, completing a work in less time
than normally allowed, improving quality of products,etc.These plans
benefit both employees and employers. The former get more wages
and the later are successful in reducing overhead costs per unit of
output.

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 TYPE OF GROUP INCENTIVE PLANS
 Priestman’s plan
 Scalon Plan
 Co-Partnership
 Profit Sharing
 Objective of Profit Sharing
The following are the objective of this scheme.
1. To recognize the right of workers for sharing the prosperity of
the company.
2. To help maintain cordial relations between employers.
3. To make worker feel as member of the enterprise rather than
only employees.

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 TYPE OF GROUP INCENTIVE PLANS
 Priestman’s Plan
Under this plan a standard production is fixed for
the whole factory. If productivity exceeds the
standard then bonus is paid in accordance with
the increase. In case production does not reach
the standard then workers get minimum wages
only. For example, a standard production of
100000 units is fixed for the year . Actual
production during the year is 1,20,000 units.
Since production has one up by 20% workers will
get 20% higher wages as bonus.

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 BALANCE OR DEBT METHOD

 The method is a combination of time and piece

wage system the worker is guaranteed a time
rate with an alternative piece rate.

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THANKS

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