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What are the remuneration systems?

The remuneration system is a method of determining the amount and components of remuneration for work performed by an employee. It is a way of determining the quantity and quality of work done and translating it into an economic dimension

Time system

In the case of a time system, the amount of remuneration depends on the amount of time worked in a given accounting period.

In this system, the rates of remuneration are set in relation to the number of time units, which are:

  • Hour,
  • Day,
  • Week,

Hourly and day rates are most often applied to employees employed in worker positions. Their remuneration is determined by multiplying the rate per hour or day by the number worked in a given accounting period

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The monthly time system is most often used for administrative and office employees. Employees receive a fixed remuneration at the end of each month of employment, as indicated in the employment contract.

It is widely believed that the time system is considered low motivating. It is not dependent on the results of the work done. The time system is often supported by bonuses and rewards that are to motivate employees to work more efficiently.

Piecework system of work

In a piecework system, the employee’s remuneration depends on the results of his work (e.g., on the number of products made) and not on time worked.

Unlike the time system, this system motivates the employee to work more efficiently. However, he does not guarantee him some income, as is the case with the time system.