This is also known as payment by results or piecework. This is a direct alternative to
time related pay. Employees paid under an output related pay method are paid a fixed
amount per unit of output achieved, irrespective of the time spent in production.
As far as an employee is concerned, payment by results means that they can earn
whatever they wish within certain parameters. The harder they work and the more
units they produce, the higher they earn. From the employer’s point of view, higher
production or output can also be encouraged with a system of differential piecework.
A major problem with this method of payment may be the ability to maintain quality of
work.
Illustration:
Sally Ltd uses a piecework method to pay labour in one of its factories. The rate used
is 90p per unit produced. Calculate the gross wage per week for the workers.
