Glossary

Chapter 3
Bonus pay An amount paid to employees in addition to regular earnings for a variety of reasons, such as outstanding
performance, as a result of higher-than-usual company profits.
Contributory
A pension plan that requires a partial contribution made on part of the employee.
plans
Defined benefit A guaranteed amount of pension benefits paid to a retired employee based on a formula that considers the
plan employee’s past level of earnings and length of service with the company.
Defined
A plan specifying the maximum amount of contributions that can be made to the plan by employer and
contribution
employee.
plan
Employee A form prepared for each employee showing the employee’s earnings each pay period and cumulative
earnings record earnings for each quarter and for the year.
Federal
Insurance Federal legislation requiring both employers and employees to pay social security taxes on wages and
Contributions salaries.
Act (FICA)
Federal
Federal legislation requiring employers to pay an established rate of tax on wages and salaries to provide for
Unemployment
compensation to employees if they are laid off from their regular employment.
Tax Act (FUTA)
Holiday pay An amount paid to employees for designated holidays on which the employee is not required to work.
Hourly rate plan A wage plan under which an employee is paid an established rate per hour for each hour worked.
Incentive wage A wage plan modified to increase worker productivity by paying a bonus rate per hour when an employee
plan meets or exceeds established production quotas.
Labor cost
A form showing the allocation of total payroll to Work in Process and Factory Overhead.
summary
Labor time A record showing the employee’s time spent on each job, as well as the time spent as indirect labor on
record machine repair.
Make-up An amount paid to employees under a modified wage plan when established production quotas are not met
guarantee during a work period. The make-up guarantee is charged to the factory overhead account.
Modified wage
A wage plan that combines certain features of the hourly rate and piece-rate plans.
plans
Noncontributory
Pension plans that are completely funded (paid for) by the company.
plans
Overtime pay The amount earned by employees at the regular hourly rate for hours worked in excess of the regularly
scheduled time.
Overtime
The additional pay rate earned for working hours in excess of the normal daily or weekly hours.
premium
Payroll record A form prepared each pay period showing the earnings of all employees for the period.
Payroll taxes Tax imposed on employers and that includes Social Security tax, and federal and state unemployment taxes.
Pension costs The costs incurred by an employer to provide retirement benefits to employees.
Piece-rate plan A wage plan that bases earnings on the employee’s quantity of production.
Production
A system where output is dependent on contributions made by all members of the work crew or department.
work teams
Productivity A measure of the amount of output per hour of work.
Shift premium An additional rate of pay added to an employee’s regular rate as compensation for working an evening or
night shift.
Vacation pay An amount paid to employees during their vacation periods as part of the employees’ compensation for
services to the employer.
Work shift The regularly scheduled work period for a designated number of hours.