Payment System & Working Hours

By Khizar Baloch
 Topics

 Explain different types of payment system

 Wage system in use
 Legal requirements which impact payment of
wages
 Explain reasons for overtime & limitations
 Study shift system of working

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 Topics

 Alternative work schedules like flextime, job

sharing and part time etc.
 Advantages of teleworking

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 Remuneration

 In return of their work, employees are paid agreed

amount is called remuneration
 Basic Wages

 Benefits

 Incentives

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 Primary Goals of Wage System

 Attract employees to work in the organization.

 Retain efficient employees
 Motivate employees to perform effectively
 Establish simple system that is easy to
administer

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 Factors Important as Regards to
Wage

 Highest financial package

 Stability of Income
 Plan their personal finance

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 Wage System

 There are two major systems of payment:

 Time related system
 Easy to understand & administer
 Worker is assured of Steady Income

 Piece rate system

 When easy to learn or good dexterity
 Job is not machine control

 No stoppages/breaks in production

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 Factors Effecting Level of Pay

 Legislation & Government policies

 Unions
 Selection policy
 Employment conditions
 Company profitability

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 Factors Effecting Individual Level of
Pay

 Seniority
 Increase in the cost of living
 Performance
 Degree of skill

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 Wage definition as per Employment
Act

 According to employment act wage is basic

wage & other payments in cash payable to an
employee for the work done in respect of
his/her contract of service, but does not include
 Travelling allowance
 Terminal benefits/retirement gratuity

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 ORP (Ordinary Rate of Payment)

 This is calculated with reference to mode of

payment to the employee which can be hourly,
daily, weekly or monthly:

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 ORP (Ordinary Rate of Payment)

 For weekly rated employees, the ORP is:

Weekly rate of pay

6 Days

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 ORP (Ordinary Rate of Payment)

 For monthly rated employees, the ORP is:

Monthly rate of pay

26 Days

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 ORP (Ordinary Rate of Payment)

 For hourly, daily & piece rated employees, the

ORP is:

Total wage earned in the preceding period

Actual number of days worked during that wage period

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 Deductions of pay as per employment act

 On written request from employees for the

purpose of:
 Payment to trade unions
 Payment to cooperative societies

 Payment of shares sold to employees by employer

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 Deductions of pay as per employment act

 On written request from employees with

written approval of DG labour:
 Payment to superannuation, welfare schemes
 Payments to third party

 Repayment of advance wage granted to employee

 Cost of food, accommodation, or any other service

provided to employees by employer
 Any other payment which DG is satisfied for the benefit
of employees.

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 Deductions of pay as per employment act

 Without the consent of employee for the

purpose of:
 Deduction authorized by any law like provident fund,
group insurance etc.
 Deduction of payment of wages made by mistake during
preceding 3 months.
 Deduction for any indemnity due to employer by the
employee
 Deduction of advance on wage

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 Working Hours

 No employee should be required under his

contract to work:
 More than 8 hours per day, or
 More than 48 hours per week, or

 More than 10 hours per day when a spread-over period is

involved, and
 More than 5 consecutive hours without a 30 minutes
break.

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 Working Hours

 Rest Days
 At least 1 rest day in a week
 Decision lies with employer

 If worker is asked to work on rest day he is entitled

premium rate.
 Public Holidays

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 Weekly Working Hours in UK
1850-1990

Period No. of hours

1850-1880 60

1890-1930 54

1940-1950 48

1960-1970 44

1980-1990 40

1990s 36-39

2000-2020 ?
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 Choosing Working Hour System

 The legal constraints

 Effects on efficiency due to particular system
 Effects on motivation of workers
 System being used in the vicinity by
comparable organization in locality

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 Over Time

 According to employment act employees need

to work 8 hours a day and 48 hours in a week.
In exceptional cases they can work longer than
normal are:
 Work is essentially for the life of the community
 Work essential for the security/defence of country
 Urgent work to be done to machinery or plant
 An interruption of work which was impossible to foresee
 Work to be undertaken for the uplift of country’s economy

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 Over Time

 Ordinary working day= 1& half times of normal rate

 Rest day = 2 times of normal rate
 Public holiday = 3 times of normal rate

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 Reasons for Over Time

 A temporary shortage of manpower

 A temporary increase in workload
 Low productivity of workers
 Difficulty in recruiting additional workers

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 Problems Caused by Excessive Over
Time

 Increase cost
 Effect on employee’s moral
 Lowered productivity
 Effects on employee’s health

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 Steps to Reduce Over Time

 Keep records
 Recruiting new staff
 Improving supervision & training
 Investment in new technology
 Changing the mode of payment

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 Shift Work System

 Hours of work
 One shift
 Double day shift
 Three shift work
 Split shift
 Rotating & permanent shifts
 Justification for shift work
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 Problem Caused by Shift Work

 Women and night work

 Increase in cost
 Workers health & shift work
 Stress & physiological problems

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Alternative Working Hours

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 Flexitime

 Benefits
 Easier to recruit
 Higher productivity

 Reduction in over time payments

 Better customer service

 Fewer transport headaches

 Problems
 Feasibility
 Supervision & communication

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 Alternative Working Hours

 Job haring
 Requires high level of trust, communication & teamwork between
employees sharing job
 Working part time
 Teleworking

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