Teachers receive a time rate pay. Image credit tlantablackstar.com

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.