Piece Rate System - Labour Remuneration
However an employee is paid a fixed amount for all units produced irrespective of time in use; the wages payable are computed like follows:
Wages = Number of units produced X Rate per unit
During this case, there is a flat rate per unit. Conversely, a company may modify this and apply the Taylor's differential price rate system whereas three piece rates are set for all jobs: the low, common higher piece rate. Conversely the low piece rate is applicable whereas a worker is not capable to achieve the standard or common output and the highest piece rate is for such above standard. This may lead to high wage differential in that company and consequently demonization if it does not guarantee minimum wages on time basis. For this purpose, the differential price rate systems and also many variations of the piece rate system have a minimum or guaranteed pay.