What is a time-based form of remuneration and when is it best to use it?

What is a time wage?

Each enterprise has its own specific form of remuneration. This is due to the specifics of production. For example, in one company employees are paid for the quantity of products they produce, and in another - for the time actually worked.

The manager himself determines what kind of salary he will have in production. But nevertheless, this issue is coordinated with the trade union organization. Every employee who gets a job can find out about his salary in advance. The type and form of monthly payments is prescribed in the employment contract.

In the Russian Federation, only 30% of enterprises have time-based wages, although, for example, in the USA this figure has exceeded 70%. Now let’s decipher the concept itself.

Time wages are a type of salary where the amount of employee payments directly depends on the hours, days or months actually worked. This takes into account special working conditions and qualifications of specialists.

Simply put, a time-based form of remuneration is when wages are paid not for the quantity (volume) of work performed, but for the time it is performed. That is, the hours of work that were spent on completing a particular task are paid.

Salaries are calculated based on the completed working time sheet. There, the standard keeper indicates how many hours or days the employee worked.

Specifics of the time-bonus salary system

Any “time payment”, regardless of its type, is based on the accrual of amounts earned for the time that was actually working for each specific employee. The nuances are associated with additional payments, which can be added to the main quantitative indicator, depending on the tariff rate (salary).

A time-based bonus payroll system is a method of remunerating employees in which they are entitled to an additional amount in addition to their basic earnings when they achieve pre-agreed conditions, quantity and/or quality indicators.

Unlike a simple “time-based system”, which depends only on indicators of time worked, the time-based bonus system also expresses dependence on additional factors:

volume of work;
the quality of its implementation.

Question: Is it possible for an employee with a time-based bonus payment system to pay his usual salary instead of maintaining average earnings while on a business trip? View answer

Where are time wages most often used?

Time wages are paid in industries where the quality of work, rather than quantity, is valued. It is this type of salary that encourages employees to constantly improve and raise their skill level. Time-based wages are used in the following cases:

If the employee’s activities are regulated by a certain rhythm or he works on assembly lines;
If the work involves maintenance and repair of equipment;
If the qualitative indicator of work is valued higher than the quantitative one;
When it is impossible to determine a quantitative indicator of labor, or this procedure is difficult or irrational;
When the result of an employee’s work is not the main indicator of his work;
If an employee, with all his desire, cannot influence an increase in the volume of products produced, due to the low productivity of the equipment.

This salary is most often paid to accountants, medical personnel, teachers, lawyers, government officials, managers, etc. For example, it is very difficult and pointless to calculate how well the teacher worked this month and how much information the students learned.

Advantages and disadvantages of time-based wages

Obvious advantages of “time-based”:

Constant income. Workers always receive wages, even if something happens, for example, with equipment. That is, the influence of these and other external factors does not affect payments.
Low staff turnover. People like this kind of work and are interested in it. They rarely quit and are not inclined to change jobs.
Efficiency in the event of difficulties associated with labor standardization, when it is almost impossible to calculate the volumes, (quantity) of services, products produced.
Lack of negative motivation, as well as team cohesion, minimizing conflicts.
Accessible tracking of hours worked, simple management of personnel policies.

The main disadvantages of “time-based”:

Minimal employee motivation. Their earnings do not depend on their efforts. This drawback can be eliminated through the use of a piece-time system or the establishment of bonuses.
Despite the high responsibility of the team, labor injustice often occurs. Individual workers do the work of others, but they all receive the same pay.
Significant risks associated with instability of performance and decline in financial performance.
Ineffective in emergency situations.

Type of time salary

There are several types of time wages.

Simple time wages - paid to employees whose responsibilities include maintaining the functioning of production. The employee does not in any way influence the final result of the product produced or service provided. The employee receives a fixed salary for the time worked in production. However, he cannot count on any additional payments.

Salaries can be calculated by period. Hours, days or months can be taken into account.

Example. The employee has a tariff rate of 60 rubles/hour, he worked 50 hours, therefore his salary will be 60 * 50 = 3000 rubles.

If an employee works for a month (works out a monthly standard of hours) and has a fixed salary, then his salary will correspond to the size of his salary.

The advantage of a simple time-based salary is its stability, but the disadvantage is the lack of motivation for the employee (everyone receives the same salary, regardless of work results). A simple time wage is very rare.

A time-based bonus salary is when an employee, in addition to his salary, receives additional payments in the form of bonuses for fulfilling certain conditions. For example, the absence of disruptions in work, no emergency situations were allowed, exceeding the plan, manufacturing products without defects, saving raw materials and energy resources, etc.

When calculating this type of remuneration, not only qualitative indicators are taken into account, but also quantitative ones.

The conditions for payment of bonuses and their amount are specified in the employment contract. Bonuses include the following payments: 13th salary, additional payments for length of service, holiday bonuses, etc.

Calculated as follows:

Basic salary + Bonus = Time-based bonus salary

The basic salary means the salary or tariff rate multiplied by the number of hours actually worked per month.

The bonus amount is a percentage of the basic salary.

Example. The employee has worked out the standard hours and his salary is 10 thousand rubles. For a job well done, he is entitled to a 10% bonus. We make calculations:
10,000 + 10,000*0.1 = 11,000 rubles.
With time-based bonus wages, the employee is interested in quickly and efficiently completing the task. Awards are a great way to stimulate and motivate the team.

Time-based bonus with a specific task - at enterprises where this form of wages is in effect, monthly payments to employees consist of payment for hours actually worked and additional payments (in the form of bonuses) for completing assigned tasks.

This is a type of time-based bonus salary. With this type of remuneration, the manager can count on a guaranteed result in completing the task, because the amount of the employee’s salary depends on this. And this is the main motivator for fast and high-quality work.

Piece-time wages - sometimes it is called mixed, because it combines piece-rate and time-based wages.

This salary is most often received by people whose activities are related to trade. For example, sellers, in addition to payment for actually being at the workplace, are accrued interest on products sold.

This condition interests employees, and they strive to increase the level of sales.

How to formalize labor relations when using time-based wages

The procedure for calculating wages (its amount, method of calculation) is determined before the start of the employment relationship. As is customary, this issue is resolved individually with the employee or according to a standard general template, depending on the prescribed standards in local regulations.

In the employment agreement, when establishing “time work”, the terms of payment for work must be specified, namely:

the amount of the tariff. rates (or official salary);
additional payments;
allowances;
incentive payments (bonuses).

The mandatory content of the employment agreement is determined by Art. 57 Labor Code of the Russian Federation. It is drawn up in two copies.

Comparative characteristics of time and piecework wages

Each form of salary has its pros and cons. It is impossible to say unequivocally which one is better and which one is worse. Each company has its own type of salary.

Nevertheless, we provide a comparative description of different types of remuneration for workers.

Criteria for evaluation	Forms of remuneration
Criteria for evaluation	Piece wages	Time salary
Where is it used?	In enterprises where any product is produced, or where quantitative indicators are valued	In the service sector, services, in the case of project orders. That is, where the quality of the work performed is valued
Dependence of wages on labor productivity	Salary directly depends on the volume of work performed. The higher the labor productivity, the more the employee will earn	There is no dependence, or it is indirect. The employee receives the salary due to him, even if he works at half capacity (unless a bonus is provided)
Who benefits?	Beneficial for the employer, because he pays only for the product produced	Beneficial for the employee. He doesn’t have to try, because he’ll still get his salary
Salary stability	Unstable. If an employee is absent from work (even for a good reason), he will still not receive wages for the days missed	Stable, i.e. guaranteed
Availability of motivation	Present. Employees always strive to do more to get a higher salary	If bonuses are not provided, then the employee has no motivation. After all, he is guaranteed to receive a salary
Quality of work performed	Often quality wants to be better, because workers strive to do more without thinking about the quality of the work performed	If an employee receives a bonus for quality work, then he will try his best to get an increased salary. Accordingly, the quality of the work performed will be high

Rate (salary) plus bonus, and that's it?

The time-based bonus system does not exclude additional incentives for personnel, including financial ones. The employer has the right to decide on any financial additional payments that he deems appropriate, for example:

material assistance;
social benefits;
special awards;
bonuses for various indicators, etc.

It is only necessary to fix all the financial components of wages in the relevant documents: an employment (collective) agreement, Regulations on bonuses, and other special regulations.

How to calculate wages for work on a non-working holiday if the employee has a time-based bonus wage system?

How is the calculation done?

The time sheet contains complete information about what part of the required days or hours the employee worked. When calculating wages, this data and the established payment for full time worked - salary or tariff rate - are used.

As for the salary, it is accrued in full if the employee was present at the workplace on all working days. If some days were missed, then wages are calculated in proportion to the actual time worked.

In the case of a tariff rate, data on the number of hours (days) worked by each employee is taken from the timesheet and multiplied by the hourly (daily) tariff rate established for him.

If there are bonuses or other incentive payments, a certain percentage is added to this amount. All this money together - salary, bonuses, allowances - will ultimately make up the salary that will be accrued to the employee.

On our Internet portal you can find out information about the minimum amount and withholding of wages, as well as what constitutes nominal, additional, deposited and gray wages.