Methods of Payment

The traditional method of paying wage earners is for the employees to queue up at a stated time at the pay office and draw their net take-home pay in cash, either loose or, more usually, in a sealed wage packet, accompanied by the pay slip. The law requires that no other method of payment may be used for paying wages to manual workers without the consent of the employees concerned.

Most large employers, and many smaller ones, offer alternative method of paying wages which you are free to accept or decline. These methods avoid the need for handling cash by making payment in one of two ways. Either you may be handed a cheque, which you can pay in to your own personal bank account if you have one, or can cash at your employer's bank; or you can have the net amount of your pay credited direct to your bank account, in which case you may receive your pay slip from your own bank instead of from your employer.

Payment by cheque or direct bank transfer is almost universal for employees engaged on the basis of an annual salary paid monthly.


1. What are the two main bases for calculating pay?

2. Briefly explain the difference between a wage and a salary.

3. Explain what is meant by 'time and a half in describing overtime rates.

4. Name five conditions under which pure time rates are usually the most satisfactory basis for remuneration.

5. What are the main disadvantages of time rates?

6. Suggest ways in which motivation might be introduced for time workers.

7. In what circumstances are pure piece rates to be preferred to time rates?

8. Briefly describe one method of combining piece work with time work.

9. Name some of the advantages of payment based on measured output.

10. Name some disadvantages of piece rates. On what basis would you recommend that the wages of a railway ticket collector be calculated?

11. Name as many examples as you can of fringe benefits.

12. Apart from cash, in what forms might you be asked to accept payment of your net wages?

13. What statutory deductions must be made from your gross pay?

Getting Paid

Employees are generally paid weekly, fortnightly, every four weeks, or once per calendar month. With every payment the employer is legally obliged to supply a pay slip showing in detail how the amount of take-home pay is worked out. In particular it will show basic pay for the period, overtime, bonuses or commission, and will itemise all the deductions.

Certain deductions have to be made from gross pay. Two compulsory deductions are income tax under the Pay-as-you-earn system (PAYE), and your National Insurance contributions. Income tax is explained in Chapter 3. National Insurance contributions,... see: Getting Paid

Personal And Business Finance 2018

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