Teachers receive a time rate pay. Image credit atlantablackstar.com
ZIMSEC O Level Business Studies Notes: Hourly rate/Time rate
- This is a way of paying workers based on the time/hours spent working
- The number of hours is calculated by multiplying a pre-agreed rate with the number of hours/time worked
- This is the most common way of paying manual, clerical and non-management workers
- This method is directly linked to the level of output
- The formula for time rate is:
- \text{Wages} = \text{(Wage Rate per hour/week) x Time spent working}
Advantages
- It is simple to calculate and easy to understand
- Places emphasis on quality instead of just quantity
- It is suitable for workers whose output is not measurable e.g. teachers and security guards
- All employees earn a similar wage for similar work (equality among workers)
- Results in less wastage of inputs and raw materials on the production line
Disadvantages
- There is no correlation between effort and reward
- It does not distinguish between efficient and inefficient workers
- It does not distinguish between skilled and unskilled workers
- It may result in idle time being paid
- Requires strict supervision to minimise idle time and slacking
- Complicates the costing function of the organisation as it is difficult to calculate the cost of production per unit in advance
- Makes financial planning much more difficult
To access more topics go to the O Level Business Notes page.
