Page 88 - Accountancy_F5

There are number of factors that need to applied on a total number of hours
be considered when making decision on worked, or it may be based on an
how to remunerate employees within an agreed monthly or annual amount,
entity. Higher salaries and wages may example monthly salary.
actually increase staff motivation which (b) Piece based remuneration
in turn increases productivity and quality of schemes
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outputs. On the contrary, higher salaries of The payment under this scheme
employees increase the costs of production depends on the number of units
which in turn reduces the profit of the firm. produced by an employee. Some
Therefore, the entities have to take into firms use to set a minimum amount
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account the following considerations when of units to be produced by a worker
making decisions regarding employees’ for a particular period of time, below
remuneration: which she/he may not get paid.
(a) general wage levels in a country,
sector or industry; (c) Commission based
(b) level of employee’s productivity; remunerations
(c) level of education and training of A wage is paid as a percentage of
employees; the sales volume. An employee will
(d) incidence of fixed overhead in payroll; therefore get paid based on the number
and LANGUAGE EDITING
of units sold by him/her.
(e) impact of labour turnover and
motivation. Employee’s earnings/
compensation
Methods of employee’s
remuneration Employee’s earnings may include basic
Employee in an organisation may be salary, gross incentives, allowances and
remunerated in a number of forms. It commissions. These earnings are further
involves all aspects of paying compensation explained in detail in the following sub-
and benefits to employees. Generally, sections.
the decision relating to employees’ Employee’s basic pay
remunerations include: fixed salary scales; Employee’s remuneration usually takes the
rate of wages per hour; increase in salaries; form of salary or wages. The amount of
and post-employment benefits. Often the wages/salaries agreed to be payable to an
basic pay to staff may involve a combination employee as per contract of employment is
of two or more modes. The most common known as the basic pay. Basic pay is fixed
modes of remuneration are the following: at the time of employment before taking

(a) Time based remuneration into account other forms of earnings such
schemes as overtime payments, allowances and other
Where a fixed rate per hour may be benefits.

Student’s Book Form Five
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