Some employees are paid based on how many items they produce at work. For example, an employee in a T-shirt factory who is paid based on how many T-shirts she makes. This is called a piece rate.
Piece-rate pay is often called ‘payment by results’. It rewards fast workers, but quality might be affected if employees rush their work to get more pay.
The basic pay of employees paid a piece rate is calculated as follows: Piece-rate basic pay = rate per item × number of items produced
Example
Jim Sweeney is paid €3 for every basket of apples he picks. In a week, he fills 180 baskets of apples.
Jim’s basic pay per week: 3 × 180 = €540
A piece-rate worker’s wage can change every week. By law, businesses that pay wages this way must make sure that their employees earn at least the minimum wage.
CALCULATING ADDITIONAL PAY
Overtime In chapter 1, we learned that overtime is a payment to employees for any extra hours they have worked. For example, if a person’s normal working week is 38 hours and they work 50 hours in a given week, then they have worked 12 hours of overtime that week.
Overtime is often paid at a higher rate than normal hours worked. It is usually paid at the following rates:
• Time and a half (1.5 times the basic hourly rate) • Double time (twice the basic hourly rate).
Overtime pay is calculated as follows: Overtime pay = number of overtime hours worked × overtime rate
Example
Rian Kelly is paid €12 per hour for his normal hours worked. If he works on a Sunday, he will be paid time and a half. Rian’s Sunday overtime: 12 × 1.5 = €18 per hour
If Rian works on a bank holiday, he will be paid double time. Rian’s bank holiday overtime: 12 × 2 = €24 per hour
