The amount of pay to which an employee is entitled may be earned in a variety of different ways, including:
wages paid according to the number of hours worked
salaries (usually a fixed amount and paid monthly)
wages paid according to the output of the employee.
overtime pay, for extra hours worked by the employee
shift pay, to compensate for unsocial hours.
bonuses paid under bonus schemes, based on productivity, or profitability
commission paid, normally based on sales.
Some employees are paid on the basis of a set amount for every hour that they work. This may be so even if they have agreed to work a certain number of hours per week. If hours in excess of the agreed amount have been worked, or hours are worked outside set times, they may be paid at a different rate, as overtime. Overtime is discussed more fully later.
Workers paid on the basis of an hourly rate normally receive their pay weekly.
If an employee is paid according to the number of hours worked, there must be a method of recording the hours worked.
The exact method will vary according to the type and size of the employer, but some examples are described below.
Each employee has an individual card which is inserted into a machine at the start of the working day, and again at the end of the working day. The machine records on the card the times of arriving and leaving work.
An example of the format of a clock card is given below. In this example the employee has clocked on at 8.49 on Monday morning by inseting the clock card into a machine which stamps the time on the card. when the employee next places the card in the machine - breaking for lunch at 12. 12 on Monday - the card slips further down into the machine and therefore the time stamp appears above the previous one. The employee returns to work at 12.55 on Monday and clocks off at 16.42. Tuesday shows a similar pattern.
The example contains space for the payroll department to analyse the time between basic hours and overtime hours. It may also contain space to record the basic pay and overtime pay, along with deductions.
Clock cards may be replaced by smart cards. These cards record the same information, but it is recorded on a magnetic strip on the card. Smart cards may also be used for other purposes not related to the payroll.
Each employee is required to fill in a list of the hours worked on a standard form, known as a timesheet. The timesheet may require additional information, such as what tasks the employee carried out, and how long each task took. After completion, the timesheet is then, usually, authorised by the supervisor/manager.
Weekly, fortnightly or monthly timesheets may also be used. These are more common among professional salaried staff, such as solicitors or accountants, who are not paid on an hourly basis, but when the employer needs to know the time spent working on behalf of each client, so that the client can be charged accordingly. Normally the employee will need to keep daily records which are summarised, so that entries are not omitted.
A simple timesheet for an hourly paid worker may look like this:
The timesheet should also record idle time. Idle time occurs when the employee is unable to complete a task because of something outside their control, for example waiting for a replacement part to be delivered. The cost of each job is completed later by the payroll department.
A weekly timesheet for a professional salaried employee may look like this:
The weekly timesheet may contain space for daily totals, or they may be kept by the employee separately. If the employee is paid overtime, there will be space to record this on the timesheet.
In addition to calculating the amounts owed to employees, businesses need to keep track of the costs incurred in manufacturing, perhaps for cost control purposes or to arrive at a selling cost for a job or product.
One simple approach to keeping track of costs is to have a system of job cards. These cards may be used in circumstances where each job undertaken has the potential to be unique, such as work done on cars in garage workshops.
Each job is allocated an identifying number and the time and materials applied to it can then be recorded on the job card.
A garage repairing cars for customers has three employees. Whenever one of the employees is working on a car, they are required to complete a job card for that particular job. Upon completion of the job, the customer is then invoiced for the total on the job card. A typical job card for a recent repair is shown below.