Payment Systems

Pay is a very important aspect to workers - all thoeries of MOTIVATION agree that it is one of the most fundamental factors in motivating workers.

Business' must have reliable systems in place to get money to workers when it is due to them..... After all, most workers will be waiting for their money to arrive to meet their own obligations - the mortgage, utilities, food, car, clothing etc.

How much a worker receives for their work and how they get paid will depend upon the arrangements made in their contract of employment

There are several different systems a business can choose from:

SALARIES - are normally stated as an annual figure e.g. $40,000 per year. The figure is the GROSS SALARY, in other words any direct taxes (income tax) will be taken off this amount before the worker receives it.

Salaries are usually paid in 12 equal monthly insallments directly into the employees' bank account.

The majority of PROFESSIONAL or WHITE COLLAR workers are paid in this way.

WAGES - are normally stated as an hourly figure. In the UK, the National Minimum Wage act of 1998 outlined a minimum amount per hour that workers should receive:

As of October 2006 the following minimums applied in the UK:

Age 22 years and over: 5.35 GBP per hour

Age 18 - 21 years: 4.45 GBP per hour

Age 16 - 17 years: 3.30 GBP per hour

Wages are usually paid on a WEEKLY basis. They are calculated by:

Hours per week x amount per hour.

Wages traditionally used to be paid to workers in CASH. Now however many wages are also paid directly into workers' bank accounts.

PERFORMANCE RELATED - this is not usually used as the ONLY payment to workers, but as an 'add-on' / 'top-up' or incentive.

Many sales jobs will have a rewards structure that includes a 'basic' salary element with the opportunity to 'top-up' salaries according to how much is sold.

Many 'sales' type jobs will state the salary as an 'OTE' figure i.e. 'Opportunity To Earn'. This is not guaranteed but depends on performance.

PIECE RATES - these were popular as part of the rewards package in manufacturing business'. They are similar to performance related above, but this time the 'top-up' is based on how much is produced rather than how much is sold.

These are less popular in the UK today, mainly because of the decline of the manufacturing sector.

BONUSES - these are also an incentives based form of earnings. They are usually applied when the whole company meets an overall target (sales or profit etc). All members of the workforce may receive a share of the bonus - usually the highest earners will get the most!!

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