What Are The Perks Of An Hourly Wage System Over A Fixed Salary System?

There are two broadly classified ways of maintaining employees and workers on the payroll. One of them is the fixed salary at previously decided intervals of time, which HR departments of organizations mainly prefer, and the other is an hour-based system. Check out Singapore’s time attendance system Singapore for new software being used for managing employees working on an hourly basis.

What Is An Hour-Based System?

In an hour-based system of incentive calculation, employees are paid an hourly wage rate which is pre-decided, for their total productive hours of the day. Nowadays, managers can easily keep track of work hours, productivity, idle time, etc.

Where Is An Hourly Wage System Used?

This system was preferred in the past and is still used in the case of the workforce involved in production activities, and it isn’t preferable for office employees. An hourly wage rate system is usually staff engaged in the business’s direct operations, i.e., the production activities. In the case of these activities, total units produced per hour and idle time of workers may vary, which is why they must be taken into account.

Why Should One Prefer Any Hourly Rate System For The Payroll?

Following Are Certain Benefits Of The Hourly Payment System:

· It May Save The Cost Incurred By The Company

Since there is an hourly wage system, and the idle time factor is considered, it may save the total cost incurred by the company on wages and salaries. Also, the production may increase because of optimum utilization of time by the employees.

· It Is Easier To Create Incentive Plans For The Workforce

It is easier to generate bonus plans and night shift or weekend shift incentives to motivate employees in an hourly system. Different methods such as the Halsey and Rowan plan, the Gantt bonus system, etc., are used. The overtime rate of payment is generally 1.5 times the regular wage rate.

· Work Hours Are Flexible

Work hour flexibility can be easily achieved using the hourly wage rate system. Employees may also prefer flexible working hours, and it is because they can work according to their preferences. Some may also choose to work only on weekends to earn some cash.

To avail of all these benefits, HR departments may prefer to keep the payroll hourly.