Wages And Salaries

Whats the difference?

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To answer the question Whats the difference the answer is simple Wages are paid weekly, often in cash Salaries are paid fortnightly or monthly, usually directly into an employees bank account.

Piece Rates

Time Rates
Overtime

Piece Rates
In this method of payment you are paid for the number of pieces or units of work you complete or sell.
If you are shearing sheep, you will get paid according to how many sheep you shear, or if picking cherries, you will get paid according to how many kilograms you pick.

Piece Rates
ADVANTAGES:
The faster you work, the more money you can earn You can pace yourself to earn what you wish and not have to work flat out all day You are paid according to your ability to do the jobs, as the rewards are better for faster, more efficient workers

Piece Rates
DISADVANTAGES:
Speed to complete more work can lead to shoddy, poor quality work. Rates of pay can be set too low, so the work is regarded as slave labour and workers are seen to be exploited Pay-based employment often ignores other factors which motivate people, such as helping people, as in the case of nursing

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Scenario
You might work for a local gardening company planting trees and get paid $2.00 for each tree you plant. If you planted 12 trees you would earn $24.00

Time Rates

In this method you are paid for each period of time you are at work, usually for each hour.

Time Rates
ADVANTAGES:
You are paid for the hours you are at work even though you might not be working all the time Everyone receives the same rate for the same job Overtime rates can be calculated to compensate for the loss of your leisure time if you have to work longer hours

Time Rates
DISADVANTAGES:
Your employer has to pay you regardless of the output you produce Those able to produce more may be less motivated to do so as they get paid the same rate as those who produce less There is little financial incentive to work hard

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Scenario
If you took six hours to plant the 12 trees and you were paid $4.00 per hour, you would earn $24.00

Overtime
As the name implies, overtime is paid to an employee when they work extra hours, or over the time, for which they would normally expect to be paid. It is usually calculated as an additional fraction added to the basic hourly rate.

Overtime
ADVANTAGES:
Employees are rewarded for working over and above their normal working week It can act as an incentive to those employees who wish to, or may have to work longer hours Regular overtime can increase an employees weekly earnings and so improve his or her disposable income and standard of living

Overtime
DISADVANTAGES:

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Some employees may work slowly during the day to create work which has to be completed in overtime It increases the firms wages bill and the payment of labour is often one of the highest costs in a business Some employees may not be willing to work overtime, even though they are offered extra money for doing so, which may make it difficult for a business to provide the required number of staff or meet production deadlines.

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Scenario
If an employees usual rate of pay is $5.00 per hour, if they are being paid overtime at time and a half, they would receive $5.00 plus a half of $5.00 ($2.50), ie $5.00 + $2.50 = $7.50 per hour for each extra hour worked.

Wages and Salaries

Now you know the difference