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.

Additional pay

Commission

Overtime

Commission is the percentage of sales that is paid to a salesperson

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

commission= total sale÷100×commission rate

Time rate

Piece rate

some employees are paid based on how many items they produce at work

piece-rate= rate per item×number of items produced

some employees are paid based on the numbers of hours they worked

basic pay= basic rate pay÷normal hours worked

Gross pay

gross pay is the total income a person earns

gross pay= basic pay+overtime/commission/bonus

Deductions

a deduction is a sum of money that is withheld from an employees's gross pay.

Statutory deductions

Non-statutory deductions

statutory deductions are deductions that must be paid

non-statutory deductions are deductions that an employee chooses to pay

income tax

pay related social insurance (PRSI)

universal social charge (USC)

pension plan

savings

health insurance

trade union membership fee

Net pay

net pay is gross pay after deductions

net pay= gross pay−total deductions

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