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chapter 2 Understanding pay (Basic pay (Time rate (some employees are paid…
chapter 2 Understanding pay
Paypath
payment of an employee's wages directly into their bank account
environmentally friendly as less paper is being used
it is very safe as the money is transferred electronically
employees do not need to go to the bank to lodge their wages
it is fast
Basic pay
basic pay is the amount of money earned by an employee for the normal working week, not including extras.
Time rate
some employees are paid based on the numbers of hours they worked
basic pay=
basic rate pay÷normal hours worked
Piece rate
some employees are paid based on how many items they produce at work
piece-rate=
rate per item×number of items produced
Additional pay
Commission
Commission is the percentage of sales that is paid to a salesperson
commission=
total sale÷100×commission rate
Overtime
paid in two rates: time and a half (1.5 times the basic hourly rate) and double time (twice the basic hourly rate)
overtime pay=
number of overtime hours worked×overtime rate
Gross pay
gross pay is the total income a person earns
gross pay=
basic pay+overtime/commission/bonus
Net pay
net pay is gross pay after deductions
net pay=
gross pay−total deductions
Deductions
a deduction is a sum of money that is withheld from an employees's gross pay.
Statutory deductions
statutory deductions are deductions that must be paid
income tax
pay related social insurance (PRSI)
universal social charge (USC)
Non-statutory deductions
non-statutory deductions are deductions that an employee chooses to pay
pension plan
savings
health insurance
trade union membership fee
Tax credits
tax credits reduce the amount of tax a person owes to the government
tax payable=
total income tax−tax credit
Payslip
a payslip is a record of an employee's pay
a payslip show an employee's: gross pay, total deductions, net pay