Piece rate system and time rate system are two different methods of wage payment. In piece rate system , wages are paid on the basis of quantity of output and in time rate system, employees are paid on the basis of time they spent at the workstation. There are some differences between these two wage payment system which are described in this post.
Piece Rate System Vs Time Rate System
Major dissimilarities between piece rate system and time rate system of wage payment can be highlighted as follows:
1. Introduction
Piece Rate System: Method of wage payment that remunerates the employees on the basis of quantity they produced.
Time Rate System: Method of wage payment that remunerates the employees according to the time they spent at the workplace.
2. Payments
Piece Rate System: Payments are made on the basis of units produced (quantity based).
Time Rate System: Payment are made on the basis of time sacrificed by the workers.
3. Focus On
Piece Rate System: This method gives focus on large volume of production.
Time Rate System: This method gives focus on quality of products.
4. Guarantee Of Wage
Piece Rate System: No guarantee
Time Rate System: There is a guarantee of minimum wage in this method of wage payment.
5. Stability
Piece Rate System: It is less stable and less secure system of wage
Time Rate System: It is more stable and secure system
6. Labor Turnover
Piece Rate System: High labor turnover because of its unstable nature and no guarantee of minimum wage.
Time Rate System: Less labor turnover because of its stability, security and guarantee of minimum wage.
7. Discrimination Or Distinction
Piece Rate System: This method of wage discriminates between skilled and unskilled employees.
Time Rate System: There is no discrimination or distinction between employees.
8. Quality Of Work
Piece Rate System: Poor than time rate system
Time Rate System: Higher than piece rate system
9. Uniformity
Piece Rate System: No uniformity in production.
Time Rate System: There is uniform flow of work
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10. Supervision And Control
Piece Rate System: Workers are self-motivated to produce more, so less supervision is required.
Time Rate System: Workers may waste the time without doing their job, so strict supervision and control is required.
11. Chance Of Idle Time
Piece Rate System: Less possibility
Time Rate System: High possibility
Distinction Between Piece Rate And Time Rate Methods Of Wage Payment In Short
* Piece rate system pays the employees based on the output. But Time rate system pays on the basis of time spent.
* Piece rate system gives emphasize on quantity. On the other side time rate system emphasizes on the quality of output.
* Piece rate system does not guarantee of wage. Time rate system guarantees minimum wage to employees.
* Less supervision and control is required in piece rate system. Conversely, time rate system requires strict supervision.
* Piece rate system motivates employees to produce more items. But time rate system does not motivate workers to work more.