In order to retain currant staff and encourage people to apply for vacancies you should ensure that a competitive rate of pay is set. A competitive pay rate will also ensure that your employees stay happy and motivated. Setting suitable rates of pay are major decision which will have long-lasting implications on the organisations, so you should ensure that you don’t fall foul of the law (e.g. minimum wage).

Pay rate system

There are two different types of pay rate systems, when selecting which pay rate system to implement the organisation should consider whether this selected system will be easy for the employees to determine how their pay is calculated and how any bonuses or enhancements are achieved.

The two pay systems are:

• Basic system. Pays employees a fixed amount hourly, weekly or monthly basis.
• The variable or incentive system. Pays employees in part or fully, based on individual or group performance, skill, results or profits.

Basic Rate

A basic rate system is easy to operate but does not act as a performance incentive to employees.

Incentive Rate

Incentive payment system link to individual performance, or productivity and are general more expensive to operate. In addition to an individual incentive, you could also choose a group incentive scheme which can reward employee based on team performances.

Organisations which implements the incentive system needs to be aware that lack of transparency in this payment system has been found to be unfair under equal opportunities law.

More information on paying staff is available from the Business Link website