Question

In order to accurately calculate an employee's pay, it is important that payroll clearly understands the different types of employee remuneration. In your own words, list and define the four categories of employment income, providing an example (other than regular pay) for each category.

Answer 1

Different types of employee remuneration:

1. Commission: Commission is paid to the employees on completion of the task given. Generally commission is paid as a percentage of the price of the product. Commission motivates the workforce to work harder and better. Sales commission is the best example.

2. Overtime pay: Generally, all the employees who work for more than 40 hours in a week are paid more than what they actually get. The overtime pay will be one and a half times normal hour rate.

For example, if a worker gets $100 per hour, who worked 45 hours in a week would get $150 per hour for the overtime 5 hours he worked.

3. Stock Options: In Employee stock option plan, compqco offers a right to its employees to buy a certain number of shares at a specific price within the specified period of time. Generally companies gives stock options to motivate or attract the employees.

4. Incentives: Incentives are generally 2 types, one is given to individuals based on performance and the other is given to a team or department on completion of a huge project assigned. Incentives are given to motivate the employees. Monthly incentives and performance appraisal incentives are most common.