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:
• $\text{Wages} = \text{(Wage Rate per hour/week) x Time spent working}$

• 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

• 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.

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